Cathy Wood compares the current crude oil market to whale oil, and predicts it will meet the same fate

Cathy Wood advocates low oil prices, likening the crude market to the extinction of whale oil in the early 20th century.

“The rise in oil prices this year is a function of supply rather than demand. At the turn of the 20th century, whale oil faced the same fate and whale oil prices fluctuated dramatically. If Tweet embedResearch is correct, oil prices will suffer the same fate as whale oil prices,” Wood said in a tweet Thursday evening.

The price of US oil has risen sharply this year with demand rebounding after falling during Corona virus pandemic. West Texas Intermediate West Texas Intermediate (WTI) crude oil futures settled near $74.38 a barrel on Friday, on track for a sixth straight week of gains. The commodity rose more than 53% in 2021. At some point during the start of the pandemic, futures contracts were trading at negative value due to the collapse in demand.

While many analysts and economists see higher oil prices as a result of increased demand, Wood assumes that it is caused by supply disruptions. The innovative investor expects oil prices to fall just as they did in the early 20th century, when whale oil prices lost value dramatically as they were replaced by other sources of fuel.

Several highly-condemned Wood companies surround technologies that go beyond the use of oil. Wood is a bull in the electric car and battery-related businesses. Overall, the widely followed investor believes that the long-term downturn will return as technology continues to disrupt many industries across the board.

“However, based on the ESG’s mandate, pension funds are asking oil companies to cut capital spending while US banks, in response to last year’s oil price crash, are denying fracking companies access to loans for capital spending, and OPEC is blocking the supply line,” Wood tweeted.

Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC) said earlier this week that it believes oil demand will continue to grow into 2035 even as clean energy sources are developed as developing countries use more fuel. Then OPEC expects that demand will stabilize.

— With a report from CNBC’s Pippa Stevens.


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