Is oil prices going up or down?

On the past few weeks we've had some events that shook the oil's market.

First, the Saudi Arabia Prince, Mohammad bin Salman said that his country was willing to keep the oil production low. This had an immediate effect on the markets, causing the oil prices to go up 2% on that day.

Second, the Iran-Iraq earthquake. They are, 5th and 4th biggest oil producers in the world, respectively. so anything major that happens in the region has a direct affect on the oil prices.

Apparently, the oil pipelines and refineries remained intact, but still, an earthquake that kills 500 people so far, has a direct impact on any country's economy.

Also, there is the Venezuela's default problem. Venezuela is the 11th biggest oil producer in the world, but the main thing about it, is that its biggest oil importer is the United States, the biggest oil market in the world. It's estimated that the oil transactions between the two countries moves around USD30 million/day.

And even worse: Venezuela has the biggest oil reserves in the world, and they are going through a major crisis right now, with the oil production levels falling each year. This limits their production, while the world demand keeps rising and, since oil is a limited resource, the prices tend to go up to compensate this. But this is thinking on the medium term and assuming that current conditions stay the same.

On our current pace and with the proven oil reserves we currently have, it is estimate that we only have 50 more years with this fuel. The following picture shows why:

Our production has been moving a lot faster than our discoveries. The bad news about this is that the more we produce, the cheaper oil tends to get. If oil is very cheap, why would someone want to creat alternative technologies to it?

Fortunately, to our world, this happened:

Oil prices reached a pike in the 2008 financial crisis, which led every country to start a search to alternative fuels.

This led to United States shale gas and to the Brazilian ethanol. But beyond, it boosted other technologies and made them competitive, such as wind and solar power, and it ended up boosting electric cars as well.

And i'm not talking only about Tesla, which is the big pioneer on this sector, but about the traditional car companies that saw that they needed to change their energy sources. This led to the engine's downsizing and to the creation of hybrid cars. All that helped reducing both emissions and consumption on the biggest oil consumption sector:

So, in the end, what's my call?

I think on the short term, the oil tends to go up, even with the WTI reaching something like 63 dollars.

But on the long run, with all new technologies that improve oil production and, at the same time, reduce its need, i think oil prices will begin to fall.

October 2017 Net Worth

From September to October there was a big loss on my portfolio. $5,027 to be exactly.

But does it mean i lost money? Well, kind of. If i'm talking about my portfolio in dollars, then yes, i lost money, but this is all due to the exchange variation.

When i look to my portfolio on Brazil's local currency, then the result is a R$8,000 (brazilian real) gain, or $2,400.

So this kind of variation will be common, and it doesn't scare me now, but as time passes, my idea is to start investing in the US stock market, as a form of protection against any kind of depreciation that can happen against the brazilian real.

So, my portfolio for October:

Government bonds: $59,813

Investment funds: $48,826

Corporate bonds: $89,108

Other loans: $21,972

Total: $219,719

First thing you may think odd is the lack of stock market on my portfolio. This is something unusual in the brazilian market.

Historically, our government interest rates have been one of the highest in the world, just as an example, 18 months ago it was at 14.25%. Now we are at a more civilized rate, as i write this post it is at 7.50%.

All this high rates have contributed to make brazilian lazy on taking risks. The thought is the following: "why should i risk myself on the stock market while i can invest in a government bond and get a 14% annual return?".

And this has caused the brazilian stock market to be way beyond its potential, since only 600k people invest on it, in a country with almost 210 million people.

Along my next posts i will comment about each investment, and also about my savings, work, budget and other subjects.

Who is the Brazilian Investor?

I'm almost in my 30s and work in the financial market in Brazil. My whole academic formation is focused in finance.

I really like reading and talking about the global economy, so from time to time i expect to share and discuss some ideas.

As for a lot of other bloggers, my main focus is to retire before the so called normal age...waaaay before. So my initial plan is to work until i'm something like 37, 38 years old and have a large enough amount to be my own boss, make my own schedules and my own plans.

I'm starting a blog in english, first of all to practice, because since it's been a long time i've used it on a daily basis, a feel like i'm losing some of the vocabulary, and i've studied so much to be able to communicate in english that i refuse to lose it just because of lack of practice.

Second, because i think it's the perfect way to follow the trends in financial markets: almost everything that happens in the US or other developed countries end up coming to Brazil. And i'm not only talking about products or fashion, but about lifestyle, industry trends, the way and what we eat, how we work...a lot of our daily lives is influenced by the developed countries.

And third, since i really enjoy traveling and, when i retire i hope that i can travel and even live in different countries across the globe, nothing better than keeping my portfolio updated in dollar values, since it's a global currency that is accepted almost everywhere.

But i don't think i'll keep the blog only focused on finance, from time to time i'll try to vary the subjects to things i like to do or to talk about.