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Government shutdowns, geopolitical angst, protracted instability inside the Beltway, and outright market manipulation are combining to make this a profoundly volatile, unsettling time.
On Wednesday, for instance, both West Texas Intermediate (WTI), the benchmark crude rate set in New York, and Brent, the more widely used oil trading standard set in London, spiked ferociously – more than for any one session in well over a decade. WTI ended trading up by 8.7%; Brent by 8%.
With these spikes coming after historic price declines, everyone in the media is now looking for the oil price "floor" that can enable steadier upward moves.
I don't expect that floor to be a factor until into 2019. Year-end tax sales, low holiday volume, and institutional portfolio adjustments mean any floor, if it shows up, probably won't register until January.
And yet, these kinds of violent swings can be remarkably profitable. Late last week, my Energy Inner Circle readers following along got the chance to close out a 1,000% profit on a Brent "straddle" – a call and a put expiring on the same date at different strike prices – that saw us play the "up" and the "down."
There are three things in play right now obscuring the "floor" and keeping crude prices untamable, but that will ultimately give way to a much smoother, upward price trend…
About the Author
Dr. Kent Moors is an internationally recognized expert in oil and natural gas policy, risk assessment, and emerging market economic development. He serves as an advisor to many U.S. governors and foreign governments. Kent details his latest global travels in his free Oil & Energy Investor e-letter. He makes specific investment recommendations in his newsletter, the Energy Advantage. For more active investors, he issues shorter-term trades in his Energy Inner Circle.