Cathie Wood's 2020 bearish oil prediction has backfired, after saying oil would crash again after plunging into negative territory in the early days of the virus pandemic. Here's what she tweeted on July 15, 2020:
"Oil demand probably hit a secular peak last year and, thanks to electric vehicles, now is in secular 'decline.' Though ARK has no formal forecast, I believe that oil prices are on their way back to $12, the level reached after the 1973 oil cartel crisis, or lower, now that EVs are taking off."
Oil demand probably hit a secular peak last year and, thanks to #EVs, now is in secular “decline”. Though ARK has no formal forecast, I believe that #Oilprices are on their way back to $12, the level reached after the 1973 oil cartel crisis, or lower, now that EVs are taking off.— Cathie Wood (@CathieDWood) July 15, 2020
Since the tweet, oil prices bottomed and haven't looked back. Wood's bearish oil call has been a disaster.
On Monday, WTI Crude Oil prices jumped above $120/bbl, reaching its highest level since 2008, after reports the Biden administration considered curbing Russian crude imports sent shock waves across commodity markets. JPMorgan Chase & Co. wrote in a note Thursday that $185 Brent crude is possible if the Russian supply continues to be disrupted.
After being so wrong for so long, Wood tweeted Monday morning, "I got the supply shock wrong. That said, the accelerated shift toward electric transportation will destroy oil consumption at the margin."
I got the supply shock wrong. That said, the accelerated shift toward electric transportation will destroy oil consumption at the margin. Long term, though longer term than I expected, oil prices will collapse under the weight of lower demand. Innovation solves problems!— Cathie Wood (@CathieDWood) March 7, 2022
... and just how wrong was Wood? The chart below explains.
Given the wide dispersion between Wood's bearish oil call and bullish fundamentals for the past year, she appears to have admitted defeat. She, of course, scapegoated the Biden administration's "energy insecurity policies" as to why she got the oil call wrong."
Oil demand probably did hit a secular peak in 2019. The supply shock caused by the energy insecurity policies of the current US administration, ESG mandates globally, and now Russia’s invasion of Ukraine has raised prices to a point that will accelerate demand destruction. https://t.co/gaOKPSg7DK— Cathie Wood (@CathieDWood) March 7, 2022
Wood is correct that higher prices "will accelerate demand destruction" as prices become unsustainable for households and businesses in the long term. The good news is that higher oil prices will drive the attractiveness of an electric vehicle over gas or diesel-powered vehicles. However, soaring precious metal prices will make batteries a lot more expensive to produce.
CNBC recently quoted Wood defending her firm's ARKK portfolio, saying she sees "spectacular returns" over the next five years.