Crude Oil Prices Will Follow ‘Whale Oil’ Path As Demand Peaks, Says ARK’s Cathie Wood


Much like the whale oil trade at its peak in the mid-1800s, crude oil prices have likely peaked.

According to Cathie Wood, founder and CEO of Ark Investment Management, who spoke of an upcoming spike in crude oil prices due to the arrival of electric vehicles (EVs), in a series of tweets late Thursday.

Citing data from the US Energy Information Administration, the investment manager said global demand for oil peaked at 101 million barrels per day (mbd) in 2019, fell to 92 mbd during the coronavirus in 2020, and has since rebounded to 97 mbd in 2021. our forecast for electric vehicle sales, @ARKInvest believes oil demand has peaked, ” Wood said.

ARK predicted that electric vehicle sales would increase by about 20 times, from around 2.2 million in 2020 to 40 million units in 2025, and industry heavyweight Tesla TSLA,
-1.08%
is the largest stake in the flagship ARK Innovation exchange-traded fund, ARKK,
-0.39%.
She also pointed to pension funds asking oil companies to cut capital spending while Wall Street banks deny them money for fracking because OPEC “stays on course for supply.” .

Regarding the gains of 50% and more observed for the US CL00,
+ 0.12%
and international benchmark for Brent crude oil BRN00,
+ 0.31%
award this year, she describes it as “more a function of supply than demand.” At the turn of the 20th century, whale oil suffered the same fate and the prices of whale oil fluctuated considerably. If @ARKInvest’s research is correct, oil prices will suffer the same fate as whale prices. “

Killing whales for their oil began in the 1700s, and trade exploded in the mid-1800s as the oil was used to light lamps and make soap, but it began to decline due to the discovery. petroleum in 1859 and later electricity. . The whale oil trade never recovered, ending completely at the turn of the 20th century.

This chart from research consultancy Thunder Said Energy shows the rise and fall of this trade:

Thunder says energy


Of course, Wood’s take on the demise of oil comes as Wall Street banks raised their crude price forecasts, with Bank of America predicting on Friday that Brent could hit $ 100 a barrel, against a backdrop of rising natural gas prices. Crude oil futures prices edged down to $ 77 a barrel on Friday, amid a report that OPEC and its allies will discuss a further increase in global production from what had previously been forecast at a meeting next week.

But a day earlier, prices rose following a report that China asked state energy companies to build up their reserves to meet winter electricity needs due to blackouts in that country. . This is when the prices of natural gas and electricity in Europe rose and some expect this to translate into higher crude oil prices.

Read: The oil sector outperformed stellar 10 other sectors in September.

In May, Wood predicted that oil prices are unlikely to exceed $ 70 a barrel, and in July 2020, said they were back to $ 12.

His latest views were pushed back on Twitter, however:

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