Investor That Can See The Future

Chapter 8

Hyunjoo noona gave a brief explanation.

The representatives of financial assets are stocks and bonds, while the representatives of real assets are oil and gold.

Before the financial crisis broke out, the price of oil was close to $150 a barrel. However, after the financial crisis, economic growth slowed, demand decreased, and prices fell.

It was the development of shale gas and shale oil in the United States that set the fire here.

It has long been known that shale rocks contain gas and oil. However, due to cost and technical problems, drilling was not possible until now.

However, oil prices of over $100 per barrel persisted, and new technologies were developed and drilling was finally possible.

American companies are scrambling to break up the shale rock and extract the gas and oil from it. But the amount was huge.

It was no exaggeration to say that it was indeed a shale revolution.

“Do you know what the world’s 3 largest crude oil is?

I heard this when I was taking a world economics course.

“It’s Brant oil from the North Sea, Dubai oil from the Middle East, and West Texas oil.”

For reference, Korea mainly imports Dubai oil from the Middle East.

Hyunjoo older sister smiled and nodded his head.

“right. As you can see, the United States is originally an oil-producing country. However, the amount was not enough to meet domestic demand, so it maintained its position as the largest importer of oil despite being an oil producing country. But the shale revolution has completely changed the situation.”

The amount of shale gas and oil produced by the United States was enough to turn the world’s largest oil importer, the United States, into an oil exporter.

Naturally, the oil-producing countries were outraged.

Demand for oil is inelastic. Consumption does not increase sharply when price rises, and consumption does not increase suddenly when price decreases.

For this reason, price formation has been centered on suppliers.

OPEC was virtually an internationally recognized cartel. Every time they colluded, oil prices fluctuated, which led to the 1st and 2nd oil shocks.

But outside the cartel, the United States emerged as a new supplier.

The once rosy outlook of over $200 a barrel has faded, and oil prices have fallen endlessly.

Demand is static anyway.

In order to raise prices, supply had to be reduced. OPEC member countries held several meetings in a hurry to cut production, but the results were always unsuccessful.

“The interests of oil-producing countries are too complicated.”

The biggest disadvantage of shale oil is that it is expensive.

Since the production cost alone is estimated to be around $45 per barrel, it has even been said that if oil prices drop below $50 per barrel, more than half of the companies will go bankrupt.

“Countries on the verge of starvation like Venezuela are in favor of production cuts because they may go bankrupt if oil prices fall further, but countries like Saudi Arabia have a lot of money, so they are in a position to hold on without production cuts for the time being. It will be difficult for the shale companies as well if the low oil price continues.”

“What will be the outcome of this meeting?”

“At least, we will fail to reach an agreement. It is currently barely hovering around $60 a barrel, but if it fails again, it will drop to below $50 a barrel. WTI (West Texas Oil) has already fallen more than 8% this week alone because all the big guys are betting on it.”

Excessive rise in oil prices is a problem, but too much falling is also a problem. Under the current circumstances, the drop in oil prices has had a detrimental effect on the economy.

“What if an agreement is reached?”

“Oil prices will skyrocket and the market will cheer, but the chances are very low.”

“But this time, there will be an agreement.”

At my words, Hyunjoo noona looked at me with a puzzled expression.

“Why do you think so?”

Without realizing it, the words came out in vain.

I frowned moderately.

“Yeah, I just think it would be nice to do that.”

Hyunjoo’s older sister smiled bitterly.

“That would be nice, but hope and prediction are two different things.”

At the end of the conversation, Hyunjoo noona’s phone rang again.

Whoa!

Hyunjoo noona checked the text and got up from her seat.

“It’s ready. I have to get up because of work. See you again. Jinhoo, take good care of him.”

“Yes. Do not worry.”

Taek-gyu grunted.

“I’m taking care of Jinhoo. My sister doesn’t even know me.”

* * *

We got back into the car to go home.

While Taek-gyu was driving, I kept thinking about what I saw earlier.

What does the OPEC production cut agreement really mean?

“·················ogue.”

Of course, that means OPEC agrees to cut production, right?

If an agreement is reached, oil prices will skyrocket. It’s common sense even if it’s not Hyunjoo’s words.

At that moment, a thought popped into my mind.

So what if you buy oil in advance?

If this is really foresight and what I saw is correct, wouldn’t it be possible to make a lot of money just by purchasing crude oil in advance?

Oh! I think I’ve got a really good idea now.

I thought calmly.

It hit a mortar explosion, and it hit Mountain Hill bankruptcy. According to the induction method, the OPEC production reduction agreement will also be correct. (Think about the blind spots of the induction method later.)

The problem is investment.

After asking for a charter and giving 100 million won to my mother, I can now spend 275 million won in my bankbook and 740 million won in Taek-gyu’s account.

Should I invest all of this?

Thinking so, Taek-gyu asked.

“Didn’t you see something while talking to your sister earlier?”

“Huh?”

“You saw it, right? What? What did you see?”

“·················ogue.”

The child is unnecessarily quick-witted.

awhile. Come to think of it, I only have about 1 billion(?), but he is ten times more than me.

I looked at Taegyu and asked.

“Are you thinking of buying crude oil?”

Taek-gyu had a puzzled expression on his face.

“crude oil? to buy oil? It’s full of gasoline now.”

“No, I’m not asking you to refuel…….”

I explained what I saw and the thought that just came to me.

When Taek-gyu heard my story, he was startled.

“Opec predicted the production cut agreement, and if the agreement is reached, crude oil will rise, so you want to buy it in advance?”

“That’s right.”

Fortunately, he understood easily.

“By the way, where do you buy crude oil? Do you have drums piled up in the house?”

“·················ogue.”

I don’t fully understand.

* * *

We arrived at Taek-gyu’s room in Yeoksam-dong.

As soon as Taek-gyu entered the house, he put the dishes on the desk aside and turned on the computer. He opened an Internet window and immediately searched for WTI.

U.S. oil production is difficult to meet domestic demand. Therefore, even if a transaction is made, it is not actually shipped overseas.

Nevertheless, it was playing the role of a price index that determines international oil prices due to the nature of the United States, where the financial market is developed.

As Hyeon-joo’s sister said, WTI was barely holding the $60/barrel level. It was $60.48 to be exact.

“It fell a lot.”

Crude oil is not just used to fuel cars, it is used throughout industry. Therefore, an increase in oil prices has a significant impact on producer prices.

When his father ran the factory, he struggled with oil prices of over $100 a barrel. But it’s been a few years since I’ve hit the floor like this.

Shale oil is really great.

Taek-gyu accessed the Golden Gate account. He sent me 500 million and I still have $11,932,000 in balance. Of this, about $673,000 is mine.

“WTI? Where do you buy it?”

“On the New York Mercantile Exchange.”(Read more @ wuxiax.com)

Taek-gyu looks like he’s excited about something.

“How long do you plan to live?”

I don’t know what’s going to happen, so why don’t you just place a half bet?

“300 thousand dollars.”

“Then buy mine too.”

“How much will you buy?”

“At least 10 million.”