How I Made Money Investing in Oil

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How’s it going everybody this is vita bush today i’m going to talk about investing in crude oil this video is brought to you by skill share are you guys bored like i am where you just sit around watching movie after movie well you can take this time to learn a new skill on skillshare you can come out of this lock down stronger than ever in finance investing or maybe

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Yourself to learn a new skill it’s a great way to pass this time if you guys are interested on becoming a member on skillshare check out the link down in the video description below where the first 1000 people that click on it will get to three months of skill share premium before i begin let me remind you guys that today i’m gonna talk about some assets some etfs

Etfs can go up or down in value this video is not intended as investing advice you need to do your own research to do your own investing or perhaps contact your financial advisor i personally am not a financial advisor i do not have a license to exercise my abilities or to consult anybody the more i look into it the more complex it is and this is my admission that

The more you find out about it the more there is to know for example there’s many many producers in the world some countries like to form a pact with each other there are different kinds of crude oil such as brent and wti crude a certain kind of crude oil may smell sweeter and some smells more sour in terms of there’s more sulfur content in it i actually never

Even seen a pile of crude oil in front of me before i’ve never visited an oil rig so all of this is just basically kind of like couch investing i am investing at home i’m finding out a whole bunch of information about it and this is not to say that you cannot invest in something just because you’ve never seen it before and my whole thesis with this is that you

Do not need to know every gritty little detail about this certain countries may have a certain price they need to deucey in order to at least break even sometimes there’s much higher price of shale oil and you might actually wonder what shale oil actually is this has the whole thing to do with fracking where in the united states we did not used to be a huge oil

Producer until this new technology came around where they inject this fluid inside the ground they go and pressurize it and they break up the rocks underneath and then they somehow are able to sneak in all these pipes and then extract oil from these fractured rock they are able to extract oil when you don’t exactly have a little oil deposit rather instead all the

Oil is just deposited deep underneath the earth’s surface now we have a lot of this in the united states and it actually costs a lot more than over in saudi arabia in order to extract each barrel of oil there’s a lot of details here but the way i am investing in the oil is just to realize that oil is not ending now and that there’s a certain running price and if

It drops way below this then i thought it’s time to buy just as long as all its not going away permanently if there is five to ten years runway i can probably wait around until it comes back and revert back to the mean so this is kind of just me investing whenever things are way off of the mean when the oil price is way below the mean then i’m like okay like i can


Just buy in thinking that eventually it’s gonna come back so this is a way for me to make money in a relatively safe manner as long as oil comes back this also hinges on whatever you buy into that those companies don’t go bankrupt i talked about ixc before and basically these are all the oil producers we got bp you got exxonmobil and you got chevron and there’s

A whole bunch of other gasoline producers in other countries like the uk and these are the components of i xe and certainly some of these companies could definitely go bankrupt so if the oil price stays low for way too long and it bankrupt some of those companies definitely i xe would permanently drop down a little bit right now it’s around $18.50 and if he asked

Me i don’t really know if it’s gonna come up in the next week or two just yesterday between saudi arabia russia mexico and the united states they all agreed on a total output cut of around nine point seven million barrels per day now i can’t even think of how big this is nine point seven million that’s a lot of barrels you know how big a barrel is i think is like

Like this big can that’s about this high and what is crude oil right this is this oil stuff this black gold that comes out of the floor i just want to go over some of the things that this barrel of crude oil makes this is important because once you understand what is made from this then you can go yeah of course the world needs this stuff and if there’s the man

Well the prices are gonna keep up higher so here it goes 18 percent of a barrel of crude oil now it depends of is this brent crude oil or wti because different mixtures of different crude oil have different compositions so just kind of take this you know as an approximation eighteen percent of this barrel of crude oil mix things such as waxes lubricants plastics

Plastics right a lot of things are made out of plastic i can take this tablet over here right this back covered is made out of plastic toothbrushes everything is plastic around here these fibers are probably made out of plastic this remote control has plastic on it you have plastic base fabric as well this blanket over here 100% polyester so this is made from crude

Oil polyester is made from kudo you think this fluffy thing came from that black stuff right and then after you get past all of this 40% of it is gasoline so yeah a majority of a barrel crude oil is gasoline 10% of it is jet fuel 23% of it is diesel floor percent is butane and propane 3% is this really heavy stuff this tar that gets eventually gets mixed with this

Rock like material that people dig out of the ground and this becomes your asphalt now if you look at this this is like a lot of you whole stuff if this infection stuff goes away we’re still gonna use a whole bunch of jet fuel people need to drive around this is the core of transportation now core of transportation right that’s a gadget right here because there’s

This whole theory about electric vehicles becoming more and more important and displacing all these gasoline car sales i’m getting a little ahead of myself here but we want to try and figure out if oil price is gonna go up or down in the future now a long time ago when saudi arabia russia you know they’re producing this oil none of this shale stuff in the united

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States existed back then and people were thinking that they’re gonna run out of oil they cannot find anymore it’s gonna go lower and lower so their production is actually going down so then the price of oil goes up to $100 per barrel now this did happen for a little while however what no one really expected happening is innovation of this shale boom suddenly the

United states is making all this oil you know just kind of took it out of nowhere right previously the oil was not extractable and then with this new technology we’re able to extract it all of a sudden the whole entire world produces a lot more oil now so then we have overproduction and then the price of oil eventually dropped more and more now another thing that

Might have came in and probably people did not expect exactly when it comes in which is evie sales going higher and higher the thesis with eb sales is that eventually the entire world is gonna use more and more v’s people are just growing tired of gasoline i personally own an eevee and i realize how good it is when you don’t have to go to the gas pump anymore when

You don’t have to breathe the fumes coming out of your car every time you start it so the idea here is that the gasoline demand will plummet because there’s more and more evs out there and the oil demand goes down therefore the price goes down now instead of all this what just happened is there is this infection going on suddenly everything is locked down people

Can’t go out people aren’t driving everywhere when you look out in the streets you see all these photos of freeways and highways and there’s no cars on it what so and the entire world is going through this right now dropping demand significantly for gasoline now as long as this infection lingers and to me this is going to linger unless we suddenly find a vaccine

Very very quickly but this is not gonna be very fast and if this does linger it means gasoline demand drops significantly and in order to have the gas price stable we have to minimize the production to meet the demand because if we have too much production then the price is going to go down so the global supply has adjust accordingly to not produce just as much oil

As people are not using now of course if we get some sort of therapeutic something that can heal them or maybe a vaccines so that it can prevent you getting it at all if something like that appears and suddenly we can restart the economy then boom overnight we’re gonna get significant increase in demand and all of a sudden the price of oil is gonna come up and in

Turn ixc which holds a lot of companies that produces oil is gonna come up as well when the travel restrictions are lifted people are gonna need jet fuel they’re gonna fly around we’re gonna be riding in cruises again and with all of these suddenly going at the same time the man is just suddenly gonna skyrocket but most likely what’s gonna happen is that they’re

Gonna do a phase roll in of people being less and less restricted so most cities and states are just allowing people to get back to normal in a gradual way we have to figure out if evie sales is eventually gonna hurt demand enough to put a dent in oil demand now this is a valid concern but i don’t think it’s a concern just yet i feel like it’s going to be a huge

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Thing probably in the next few years when evie sales are up a lot more but judging from the current sales it’s only maybe about 2% of all cars in the united states are actually electric vehicles the sales has gone up a lot and i think this is gonna go up exponentially so next year we might be like 4% of total car sales might be evs and then the year after that

It might be 8% so this is a real problem for people that are holding on to oil energy stocks i think you probably should not get into it probably in two years or so this might be a huge mistake right now i also think it’s a danger but av sales did not hinder a significant portion of oil demand just yet but it’s coming in the meantime investing in oil stocks is

Probably like playing with a ticking time bomb you are hoping that it would go up right but once this evie stuff gains traction it’s just gonna plummet down and you probably will never see it back the same way it is as before now a long time ago over in 2016 when the price dropped a lot to about $2 a gallon that’s when i actually purchased into ixc so i purchased

This etf fund before and then i sold it for a profit before when it went down to $2 a gallon over in california i just thought wow i really want to buy gasoline right now i want to buy like a thousand gallon 5,000 gallon and store it somewhere but i can’t do that so what i ended up buying is i exceed thinking that i can sort of hedge my buying gasoline without

Actually buying crude oil or a bunch of gasoline and i need to store it somewhere so i bought into the companies and i waited until the gasoline came back up to like four dollars a gallon i’m like yippee you know and then i sold it and then i just kind of used that and pretended i bought gasoline instead at a really low price i bring this up because back then in

2016 i thought that was the last time i was gonna invest in crude oil i thought it was getting a little dangerous already but because of the recent downturn because of this infection thing it really really plummeted the oil price along with the price war and stuff so i thought well you know when it goes down this low that’s what attracted me into buying it into

It again hope you guys enjoyed this video it’s just some of my musings just thinking about the things that you should be thinking about if you’re investing into this stock the same goes with any particular stock if you’re not investing in an etf like this one if you’re investing in bp exxon xom or chevron or any of those oil companies or oil producing companies or

Anything related to it that uses a significant amount of crude oil this is probably just something that you should really know thanks for watching this video i hope you guys enjoyed this brief overview of it if you guys want to meet your own decisions and trade your own stocks check out my weeble affiliate link down in the video description below or you can get a

Free stock if you just sign up and you get another free stock if you deposit more than $100 don’t forget to give me a like on this video comment down below let me know if you are investing in crude oil or in this particular ticker symbol and as always don’t forget to press the subscribe button and ring that bell icon thanks for watching

Transcribed from video
How I Made Money Investing in Oil By BeatTheBush

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