🟥 Crude Oil is now back above its 100 day moving average for the first time in more than 2 months.
‼️ Oil prices edged higher on Thursday to their highest in more than two months, after U.S. President Donald Trump said U.S. personnel were being moved out of the Middle East, which raised fear that escalating tensions with Iran could disrupt supply. ➡️ Trump on Wednesday said U.S. personnel were being moved out of the Middle East because “it could be a dangerous place,” adding that the United States would not allow Iran to have a nuclear weapon. ⚠️ Reuters reported earlier on Wednesday that the U.S. is preparing a partial evacuation of its Iraqi embassy and will allow military dependents to leave locations around the Middle East due to heightened security risks in the region, according to U.S. and Iraqi sources.
🔴 BREAKING 🚨: Crude Oil is on track for its lowest closing price since February 2021 📉📉
➡️ U.S. crude oil prices fall more than 4% after OPEC+ agrees to surge production in June ➡️ The eight producers in the group, led by Saudi Arabia, agreed on Saturday to increase output by another 411,000 barrels per day in June. The decision comes a month after OPEC+ surprised the market by agreeing to surge production in May by the same amount. ➡️ The June production hike is nearly triple the 140,000 bpd that Goldman Sachs had originally forecast. OPEC+ is bringing more than 800,000 bpd of additional supply to the market over the course of two months. Source: Barchart, CNBC
Chinese purchases of American oil are down -90% Y/Y, while Chinese purchases of Canadian oil are up +700% Y/Y.
That’s a $20B annual loss for the United States at $60/barrel. This will help reducing the trade deficit... Source: Bloomberg, Spencer Hakimian on X, Vortexa
CTAs have now built the largest short position in Oil since 2014
Source: Barchart, The Daily Shot
The gold-to-oil ratio just hit its highest level ever on the monthly chart—excluding the COVID spike.
Could the mining companies be the biggest beneficiaries? This directly impacts their margins, which are expanding significantly as metal prices climb. As pointed out by Tavi Costa, Gold is up nearly $1,000/oz from a year ago, while production costs have risen only about $100–$200/oz, depending on the mine. Source: Crescat Capital, Bloomberg
An unexpected behavior by oil...
As the red line shows, WTI is at its highest price since October. The green annotation shows that it has increased by 8% in the last few weeks. The rise of oil prices took place despite Trump win (and the subsequent "Drill, baby drill") and Scott Bessent being nominated Treasury Secretary nominee (and says the US should add 3 million barrels/day of production). So why isn't crude oil slumping and now on the verge of breaking out? Source: James Bianco, Bloomberg
Trump threatens tariffs if the EU doesn't buy more US oil and gas
The President-elect said he told the EU they must "make up their tremendous deficit" with large scale purchases of American fuel The US is the world's top LNG exporter, and the biggest Oil producer. Source: Stephen Stapczynsk
US shale oil production crossed 1 mil b/d in 2011.
Since then, Saudi's market share has been on slow but steady decline, punctuated only briefly by steep price drops in 2015-6 and 2020. How can Saudi regain market share? Either they maintain a $60+ price and see their market share continue to erode, or they increase production to reclaim market share, and see prices plummet. Either way, it's lower revenue in the short term. Should they pump more to decrease prices and regain market shares? Taking the market to <$40 again will be painful for them in the near-term, but they have the financial wherewithal to survive. Source: John Arnold on X
