$105 oil? Is this a blow-off top?
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I got a little sidetracked while chatting with Luke Lloyd, but in summary, I think oil is probably blow-off topping, and Treasuries are blow-off bottoming. We came into the Iran conflict with a supply glut, and we will likely end it with a bigger glut, but what happens in between is anybody's guess. I fear we get an inflation hedge and hot money flow into commodities if oil holds above $105.00. The administration has shifted from a temporary war with Iran to a “buckle up, buttercup” narrative. Leaked communications now suggest the administration is admitting the conflict could last through the President’s full term. This is NOT what anyone wants to hear or accept, and it's not what the oil market has been led to believe or operate on to this point, so it is repricing. The recent surge in oil has been hard to watch. It is discouraging on many levels, but we need to put it in perspective. In February, had we been given this scenario (the potential for a multi-year war, a mostly closed Strait of Hormuz, inflation spiking to lure commodity-tourist money into ETFs, and a struggling US dollar), we would have assumed oil would be much higher than $100. Link in comments and bio.
Crude oil is at an inflection point, is everyone focusing on bullish news and ignoring the bearish?
Carley Garner and Scott Shellady discussed the oil market on Cow Guy Close. An argument could be made that the narrative is focused on doom and gloom but is ignoring the green shoots. If so, oil should be nearing an inflection point.
Carley joined Bloomberg to discuss the oil market, Hormuz, and price action.
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The US is attempting to juggle a psychological operation against the oil market to counter Iran war flare-ups. It is probably no coincidence that we heard of the Venezuela deal just before learning that the US is on the offensive. However, beyond a knee-jerk reaction, the oil market might eventually view this particular round of violence as bearish for energy prices, given that the targets are Hormuz-related.
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- War and political risk priced back into crude oil, now what?
- Scott Shellady and Carley Garner discussed fresh war headlines and the implications on crude oil and inflation
- Coffee market volatility reminds us that markets seek and destroy leverage and weak hands
- The grains, the USDA acreage report, and where we might go next.
- Oil prices are collapsing, but gas at the pump hasn't.
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- Carley and Scott discussed the screwworm impact on livestock and cattle markets
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