Dear Fellow Expat: I’d prepared a screed on our Department of Energy. The incompetence at the top. The mismanagement of oil output in America. And how we’ll probably screw up what might be the largest global lithium deposit discovery. But that must wait until tomorrow. There’s something FAR more important… RIGHT NOW… As you know, […]Oil
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The Oil Counter-narrative
Dear Fellow Expat: I’d prepared a screed on our Department of Energy. The incompetence at the top. The mismanagement of oil output in America. And how we’ll probably screw up what might be the largest global lithium deposit discovery. But that must wait until tomorrow. There’s something FAR more important… RIGHT NOW… As you know, […]The Worst Trade I Ever Made in My Life
Dear Fellow Expat, It’s the first day of another negative momentum cycle. So, greetings from Lansdowne Pub. It’s a Boston-themed (BOO!) sports pub with pictures of Red Sox memorabilia on the wall, enough “handsome” pictures of Tom Brady to launch 1,000 ships to Tampa, and a large, drunken moose on every menu. It’s the closest […]Here's the Secret to Timing Your Oil Trades Perfectly
"When's the best time to buy oil?" is the question that lands in my inbox more often than any other. And I get it. Timing the market can feel like trying to catch a falling knife, especially in a sector as volatile as energy. As much as I love hearing from readers, clearly there's a […]Watch Out: The Lawyers and Lizards Just Might Win This Thing
Postcards from the florida republic: An independent and profitable state of mind. The United States is not a serious nation. If it were a business, you shouldn't invest. Last Friday, while you were buying hot dogs and hamburgers, preparing for a holiday to celebrate our independence, we experienced another bout of dirigisme – and a bid to choke […]The Smartest Move I Ever Made in the Oil Markets Was Walking Out on These Two Guys…
postcards from the florida republic An independent and profitable state of mind. Dear Fellow Expatriate, I wore jeans and an old Jos. A. Bank jacket that evening. The villains wore $3,000 suits. Their wristwatches - excuse me, “timepieces” - were worth more than my student loan balance. They drank $35 glasses of scotch. In […]This Isn't Hard: Buy Metals... Lots of 'Em... Everything You Can Get Your Hands On
postcards from the florida republic An independent and profitable state of mind. When a government man with a big ego starts blathering on about "Agenda 2030" and the state of fossil fuels… …you need to understand the endgame. The United Nations has targeted oil and gas – despite all the fuels’ benefits I touted yesterday. […]UN Head Honcho to Investors: "Do as I Say, Not as I Do"
postcards from the florida republic An independent and profitable state of mind. Despite my affinity for Switzerland, it took little time to find a new reason why I happily live in Florida with my back to the sea. Yesterday, United Nations Secretary General António Guterres took to the podium. He addressed people sitting in […]Postcards: We’re Entering an Oil Boom Unlike Any Other – Here’s What to Do About It
Dear Old Friend, Despite Goldman Sachs’ new $90 price target for oil, West Texas Intermediate (WTI) crude is down 3% to start the week. No surprise. As I said yesterday, ignore them. Invest in oil stocks as if crude will trade between $65 to $70 in 2023. From there, focus on names with strong management, […]Postcards: Our Permian Idea Is About to Get Very Profitable No Matter What Oil Does
Dear Old Friend, Goldman Sachs says recent oil production cuts by OPEC will push oil prices into the $90 range by late 2023. You shouldn’t believe them. Goldman is notorious for being wrong with their oil forecasts. More than that, there’s good reason to believe they’re actually shorting oil prices… That’s why I’d love for […]What T. Boone Pickens Taught Me About Investing in Commodities
I’d first met Boone in part because I had mocked Peak Oil as yet another nonsense Malthusian fantasy.At a 2014 Stansberry Research Conference event in Dallas, T.Boone conceded that he’d been dead wrong about Peak Oil.
Oil Is Heading Higher – Here’s What to Do (Plus: A Special Interview)
Garrett Baldwin explains why he's still bullish on oil, and why he believes going long on it is a good bet.
The Oil Sector Is Getting Ahead of Itself - Here's How to Profit
It feels like 10 years ago, but it's really only been about seven weeks since that fateful April 20, when a COVID-19-driven collapse in demand pummeled West Texas Intermediate crude oil futures. Prices hit the floor, fell through it, and landed in negative territory at -$37.63 a barrel.
In those seven weeks, WTI has rocketed almost 200%. The S&P Oil & Gas Exploration and Production Select Industry Index has risen nearly 70%, though it's still down more than 24% for the year.
Over the past few days, though, oil benchmarks have been creeping 2% and 3% lower, which in my experience is a big, neon sign saying "Selling Ahead." And several marquee energy stocks like Occidental Petroleum Corp. and Halliburton Co. are also flashing sell-off warnings.
This reminds me of the old Road Runner and Wile E. Coyote Looney Tunes cartoons - remember them? One of the (many) cheesy running gags had Wile chasing Road Runner only to overshoot him at a cliff. Wile would hang there in midair for a second, have a "Maalox moment," and then drop.
That's not all that different than what's happening in crude right now. Both the commodity and most of its associated stocks entered what market technicians like me call "overbought" territory. Now they're dropping like rocks. Investors are starting to figure out if they're in over their heads.
How do I know? The answer is worth exploring because it can make you a sharper trader. There's one simple, small number you can look at in any stock chart that can tell you instantly how to play it.
What to Do After the Greatest Collapse in Any Commodity Ever
What happened to oil yesterday was the greatest collapse I've ever seen in any commodity, ever.
And barring some unforeseen apocalypse, we'll never see it again.
This just doesn't happen in the commodities market. Every once in a while in a stock, sure, you'll get a case of fraud or someone goes bankrupt. The stock will go to $0 over time.
In the commodities world, there's a bottom for prices. This doesn't happen. Until it did.
Oil futures traded at a negative price for the first time in history.
We had the perfect storm for an oil collapse.
Demand is down. No one is traveling, and global manufacturing has plummeted.
There's a price war. Saudi Arabia drove production way up, and Russia joined them. Now there's estimates of up to 30 million barrels a day of extra oil being produced. Even with a production cut, there will be 20 million barrels a day being produced with nowhere to go.
All that oil needs to be stored somewhere, and world is running out of places to put it.
Futures contracts are tied to physical delivery of a commodity. Everyone dumped them because they have nowhere to put that oil.
No one wants oil right now.
And that's why this oil story is so troubling - it's very much a demand story, not an oversupply story...
What to Do When No One Wants Oil
An oil trading firm in Singapore, Hin Leong, kicked off oil's trouble. Hin Leong buys and sells large super tankers filled with physical oil to distribute through Asia.
Reality Gap of the Week
The OPEC oil cartel and other oil-producing countries, mainly Russia, spent most of last week hashing out a deal to cut oil production and put an end to oil's 60% price drop.
Under the so-called OPEC+ umbrella, the group finally agreed to a deal over the weekend.
Oil futures shot up, but fell back before trading Monday.
Oil opened up, but then fell.
That's because there's a huge Reality Gap between what the oil deal needed to do, and what it actually entails.
Here's D.R. with the details...
We're in Uncharted Territory for Oil
The meeting in Vienna last week among OPEC members and their non-OPEC allies, OPEC plus, was intended to help nations reach an agreement on production cuts to extend past the current end date of April 1.
The concern is the spread of the coronavirus will drive down the price further as global economic demand slows. But Russia was not on board. And the Saudis' response to Russia's stance was to cut its price to Chinese customers, and plan to increase production by as much as 2 million barrels per day. That fallout then led to oil's massive 30% nosedive. And on Monday, oil's decline was literal fuel to the stock market fire, causing it to fall 7.79% in one day. Since Monday's losses, both oil and the stock market have recovered a bit. Oil is sitting at around $33 a barrel and stocks rallied at open.