We reference the recent IEA study about oil consumption through 2050 lot over here.

We trust the IEA to a large extent.

So when they indicate the run in the price per barrel of oil may be peaking, we listen.

However, we don't put all our eggs in one basket with regards to the government.

And this recent report mentions nothing new, simply highlighting that the supply taken off by hurricane Ida may lead to an increase in supply and thus a fall in prices.

However, prices were on the upswing before Ida hit, and it's likely they will continue as the global economy begins to recover and expand.

We'll see what happens

In previous videos, we had defined $80 WTI as our floor over here.

Today, that got tested in an interesting and volatile session for oil.

We had a flurry of seemingly negative rhetoric, from covid cases rising to Schumer asking for more dumps from the petroleum reserve.

However.. let's go back a little bit in time.  We've already dumped 20m barrels onto the market. They market then hit new multi-year highs.

We had yet another wave of covid, and the oil market quickly hit new multi-year highs after a sharp panic decline.

I believe these two forces may yield yet another similar result, and by having this knowledge, we should sit tight regardless of what happens, and take advantage of any dips.  But maybe the market won't be spooked this time.

We'll see what happens.

A year ago I would not have expected to see a YTD high in the DXY and a 30 year high in inflation.

However, this exactly what we have now.

This doesn't make much sense, since the DXY implies dollar strength while inflation implies dollar weakness.

However, there are lockdowns beginning to occur over in Europe and Canada.  So maybe it's those uncertainties that are leading the dollar up, or rather, the Euro (and others) down.

This could be concerning for oil, and we are seeing OPEC now saying high prices may impact demand, but what they may really mean is that demand is simply being impacted.

Who knows, we'll see what happens.

Regardless, over here, we are sticking to the longer term plan.

Everyone is talking about inflation today and the market is down, does this mean we're doomed?

Actually, on this channel, we've been expecting continued inflation, and we also expect that it's a "lift all boats" event.

The Real Estate market, with rising input and final costs, has told us this much.  Additionally, consumer spending and balance sheets are strong, and wages are up and rising.

I'm not saying inflation is good, but I don't believe it creates a doomsday scenario.

In addition, energy seeks to benefit from inflation.  However, we're down big today. Why?

That's due to inventories implying a build up of oil.  

However, we're been here before, and it hasn't mattered in the past.  

If oil were truly in decline, the White House wouldn't have asked OPEC to increase production as recently as yesterday.

It was a mixed day for stocks, and you may have noticed a little more red than you'd like. 

After a long bull run, a day like this is nothing unusual.  Tomorrow we get CPI data, and that will be interesting given what the bond market is telling us.  Today we started with energy stocks down on the mat, as with the rest of the market. 

However, as the day progressed and the price of oil ticked up, some energy stocks broke into the green, like Exxon up almost 1% at the close. 

We are still bullish this sector and other's we've been talking about.

Infrastructure is going down, and that means a bid for mining and materials stocks to build all that stuff.

After thinking about it more, it may be unlikely Biden takes off the steel tariffs.  One of the justifications for this bill is that the money will be used to purchase American goods.. and American steel. Tariffs are No Bueno for the American Steel industry.

Energy continues to have a rally with no end in sight. The measly rig count increases are not enough to fight back against the elevated and sustainable levels of demand.

And finally, a big run for EDIT and other Crispr companies that have the potential to 10x.

We discussed the paper trader effect yesterday, and today we see it again.

On no news we have massive positive and negative swings occurring, and we're almost becoming numb.

Nothing is changing in the oil market, the supply is consistent (yet we saw a 4% peak to trough move yesterday) yet there's volatility.

The paper trader lurks in futures markets.

He causes oil to go to -$37/barrel.

I argue he shouldn't exist, unless he provides some necessary liquidity function.  However, is that even necessary in a commodities market, where the transactions should occur between producers and consumers of the commodity?

Welcome! We make market analysis nearly every day, available on many platforms.  Feel free to ask questions below.   Contact: https://www.card.cards/Billy-LoBue Twitter: https://twitter.com/BillyLoBue YouTube: https://www.youtube.com/channel/UCG8mwSUqEqlD_14Wi2Jueag

There are a number of reasons why oil should continue to rise from here, and they all seem to be coming to light today.  In addition, there are a number of reasons why Exxon in particular should be a good long term position, and one of the safest for that purpose. (there are higher beta names)  However, that did not stop one analyst from slapping it with a sell rating, expecting oil prices to decline.   We address all that in this video.