Why Oil Is an Important Economic Indicator
Meanwhile, Russia and China Connect Through Natural Gas Pipeline
December 9, 2019
PHILADELPHIA—According to nationally syndicated host and biblical investing authority Dan Celia, oil must continue to be a focus, as it is one of the true indicators of the present—and future—economy.
“Why do we need to watch oil so closely?” Celia asked. “I’m not consumed with the oil itself, but oil is always used to get a forward look at what the economy is doing. Oil has been range bound between $50 and $60 for the entire year and is on pace for its best year since 2016, following a sharp selloff late in 2018. Brent, the global gauge of prices, has also been steady and traded between $55 and $65. As stocks fell for the third consecutive session last week on worries that tariffs will slow the global economy, U.S. crude inched higher, underscoring its recent stability and range-bound trading. Because it is critical for the transportation and shipping industries, oil is used by some investors to gauge momentum in the economy. Prices had sent an alarming signal when they fell earlier in the year, hurt by worries that crumbling demand would result in a glut. But the fact is demand dropped so quickly and production was cut that there wasn’t any issue. The oil industry moved very quickly to make production cuts. And now, traders around the world are hoping OPEC will deepen these cuts and extend them through June, at least.”
Celia added that recent progress toward an initial U.S.-China trade accord and stabilizing economic data around the globe have fueled bets on an improving picture for consumption. Additionally, he noted, a new natural gas pipeline beginning in Siberia and stretching to northeast China is the latest alliance between Moscow and Beijing.
“This $500 billion pipeline has been completed, and natural gas began to flow last week,” Celia said. “It looks as though by 2025 China could be getting the majority of its natural gas from Russia. It’s expected that by 2030 more natural gas will be flowing through this pipeline to China than the annual exports from Brazil. It is very likely there will be a priority on China businesses, manufacturers, factories and power plants to continue to convert from oil and distilled products to natural gas. I believe this is a national security issue—maybe even a global security issue—and all indications are that NATO did not address this.”
Celia discusses these and other global and economic headlines on his daily, three-hour “Financial Issues” program, heard on more than 660 radio stations and several television networks nationwide.
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