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Issue 5 - Negative Oil Prices – Really?

If you saw the news headlines yesterday evening, you must have been left asking yourself the question - how on earth can the price of oil go negative?  If that pricing found its way to the petrol pumps, you could go and fill your car up and be paid for the privilege – sadly, that’s not going to happen, because of course, it’s all a technicality!  This is in fact, all down to supply and demand and the actual global demand for crude oil is currently down about 29 billion barrels a day, whereas the recent OPEC announcement to cut by just 9.7 million barrels a day, goes very little way to addressing the problem.  It therefore becomes a question of storage and as the oil price is based on the future price, where Companies are committed to the delivery of oil during May, but have nowhere to put it, this creates a problem!  As a comparison, the price for June delivery is down, but rests at $21 a barrel and for December, it increases to $32 a barrel.  All very confusing, but of course, it makes good headlines for the press and you know my views on that!

Since writing News and Views last week, markets generally have been trading in a narrow range with ups and downs, but no significant trends to speak of.  That having been said, it’s dangerous to think of the market as one thing, when it is made up of so many diverse businesses.  As an example, in the US last week, the index of leading technology and Internet related shares hit a new all-time high, whilst at the same time, the Index of Bank shares fell around 10%.  These factors and many more of course, are all the details that our Fund Managers are wrestling with on a daily basis and whilst I remain firmly of the view that we are experiencing the calm between two storms, a clearer pattern is emerging from the Fund Managers we are dealing with who are focussing on quality stocks and buying further into those stocks and into funds that themselves invest in quality Companies.  Whilst it is anticipated that volatility in markets will prevail for some time to come, by investing in those quality Companies, when the market turns, their earnings will look very attractive and this will drive their prices accordingly.

As ever, as we try to digest the information that we are being offered, we need to try to discern between the facts and the opinions.  For example, are we looking at pyramids or icebergs?  In relation to the virus, if we are looking at pyramids, then we are beginning to see the complete picture, whereas if by contrast, we are looking at icebergs, then clearly, there is lot more information that we are not yet aware of.  The simple fact is, we just don’t know at this stage.  The general consensus globally seems to be that lockdown is working and therefore, staying vigilant and maintaining social distancing has to be the sensible way forwards.  There are some arguments that say that some countries did not react quickly enough, but we are where we are, and we need to behave accordingly. As you know, Chris is a volunteer for the Kent, Surrey, Sussex Air Ambulance and I have borrowed from their weekly newsletter to volunteers, the following section and link about the NHS and through the link, you may well find some useful information.

SUPPORT FOR YOUR WELLBEING

The NHS has launched a range of wellbeing support services. They’re aimed at helping you manage your own health and wellbeing whilst looking after others.   Have a look at their online toolkit here, it includes links to support, guides to help you develop new skills and a 10-minute Pause Space script, helping you find space to re-set, recharge and re-commit in a confined space of time. Whilst you may not need these resources now, it’s handy to know they’re there if you need to refer back to them at any point.

Without doubt, extreme times bring out extreme reactions from people, some negative and some positive, but there can be few more inspirational than Captain Tom Moore, the 99 year old, who decided that he wanted to raise £1,000 to support NHS workers by walking 100 laps of his garden before his 100th birthday at the end of April.  To say this captured the imagination of the population, not only in the UK, but overseas as well, is an understatement.  To date, he has now raised in excess of £27,000,000, which I think is a fantastic demonstration of the support that individuals have been motivated to pledge and well done to Captain Tom for his efforts!  And to close by quoting him, ‘However difficult things are now, the sun will shine on you again and the clouds will go away.’

The following tribute to Captain Tom might just bring a tear to the eye!

If you would like to make a donation to his effort, the link below will take you to his “just giving” page.

https://www.justgiving.com/fundraising/tomswalkforthenhs

Stay safe!

Best wishes.

Richard, Chris and Lesley

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