POWELL VS. OPEC + CHINA?

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Transcript

00:00 Big things are happening right now in the showdown between the two most powerful organizations

00:03 on earth.

00:04 In one corner is the U.S. Federal Reserve, led by Jerome Powell, committed to reducing

00:08 inflation and the price of oil.

00:09 And on the other side is OPEC, led by Saudi Arabia, which cut oil production by 2 million

00:13 barrels in an attempt to keep prices elevated back in October.

00:16 Despite OPEC's efforts, as of today, Powell has the edge, with oil prices falling since

00:20 then, but here's the catch.

00:22 Things may be set to change as two new players enter that Powell wasn't counting on.

00:26 The first one is China, who's projected to hit record oil demand this year as the country

00:29 emerges from its strict lockdown policy.

00:31 The second, and more surprising new player, is the U.S.'s very own Department of Energy,

00:35 who announced its intention to buy oil at $70 to refill the Strategic Petroleum Reserve,

00:39 which is at its lowest point since they were filling it up in the 1980s.

00:42 But what this has effectively done is set a floor on the price of oil.

00:45 If everyone knows that the DOE will buy every barrel of oil it can get its hands on for

00:49 $70, then there's no reason for the price of oil to drop below that.

00:52 Case in point, in December, crude oil futures hit $70.01 before bouncing back to the $79

00:57 it's at now.

00:58 What does all this mean?

00:59 Powell can't only account for OPEC anymore when it comes to oil, but also China's demand

01:03 for it is set to drive up the price as well as the Department of Energy setting the floor

01:06 on it.

01:07 All of this makes the prospect of lower oil prices any time soon seem bleak.

01:10 And it looks like U.S. lawmakers know this too.

01:13 Representatives Kevin Hearn and Virginia Foxx have been loading up on energy stocks in the

01:16 past few weeks.

01:17 If oil prices climb enough, Powell might be forced to take even more drastic measures

01:21 than anyone thought, putting the economy at serious risk.

01:23 But time will tell.

01:24 In the meantime, to see if lawmakers continue to buy energy stocks, check out my website,

01:28 QuiverQuant, and thanks for watching.

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