The topic of the future of the oil sector remains a major unknown worldwide. Another big unknown is the price of the world’s first government cryptocurrency. Did the collapse of Wall Street oil affect the price of the petro?
As we know, alongside Bitcoin, the oil price is one of the most volatile commodities. And an infinite number of factors disrupt market value, not just supply and demand.
So there was no doubt about Wall Street, and future contracts, ETFs, OTCs, options, and others were created, using the millions of barrels of oil that move like the blood of economies every day as an underlying. The volatility of goods usually attracts speculators.
Oil spill on Wall Street
In addition, contracts between crude oil producers and buyers are usually completed within 30 days. During this period, the prices of these contracts are stationary. This gives speculators 30 days to predict the behavior of the next oil price.
What nobody expected is that the price of May contracts a few weeks ago touched negative territory for the first time in human history. The WTI reached up to -40 USD for a few minutes.
It’s worth noting that not all oil prices, only those for May, and only those that match the West Texas Intermadiate (WTI) index, a type of Texas crude.
The other contracts from other months as well as other indicators such as BRENT remain positive, albeit with a downward trend.
The reasons for this historic event are mainly, but not only, due to the coronavirus crisis, which has led to a decline in economic activity in the world, particularly in China. This reduced the global demand for oil derivatives.
On the supply side, both OPEC and non-OPEC were unable to reach an agreement on volume reduction. In addition to a price war between Saudi Arabia and Russia, this caused the world to be flooded with oil that was not used.
The union of both situations and another set of factors are the culprits. Today the WTI is USD 12 with a downward trend.
The price of the petro
The other big unknown is the price of the petro. It is known that it is the world’s first state-supported cryptocurrency.
According to the government of Nicolás Maduro and his white paper, its value depends on the large reserves of crude oil, diamonds and gold in the Caribbean country. We can therefore assume that the price will be greatly influenced by the events mentioned above. However, reality does not show the same thing.
If we move away from the topic of words and get involved with the fact, we will notice something rather strange.
The first thing you notice is that the price of the Petro today is $ 58.85. While its value when oil was in negative terrain was $ 58.71. This means that the price has not changed at the time of the greatest historical volatility of the oil.
The value of the petro has not changed since last week. Despite the fact that the value of black gold fell by more than 300%, there was a similar recovery. A bit strange, isn’t it?
Doesn’t Petro’s value depend on oil?
Did the collapse of Wall Street oil affect the price of the petro? The answer is simple: NO! Even the state’s first cryptocurrency saw a surge.
Another possibility would be that the other two natural resources that make up the Petro gold and diamond basket have risen in price so much that they can withstand the effects of the price cuts of black gold on Wall Street.
However, this was not the case either. Gold has risen since mid-February, while the price of diamonds remains stable.
What does the price of the Petro depend on? Reality shows that at least the value of oil doesn’t depend on the world’s first government crypto. Could it be that only gold and diamond matter? Or is the price chosen by a centralized bureaucrat of the Maduro dictatorship?