In 2013, when shale oil was in its relative infancy, Saudi oil minister Khalid al-Falih asked reporters to stop asking him questions about shale oil. “Leave us alone and leave all these issues. We had enough of shale oil and talks of shale. Please talk about anything else,” he snapped in response to a question about OPEC’s response to shale. Looking at 2017, accelerating US production failed to d…

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Tags: Crude oil

Following yesterday’s statement from the Federal Reserve, the odds of a rate hike are soaring according to the CME’s FedWatch tool. The current market-implied probability for a hike on March 21, 2018 (the next Fed meeting) is 83.1%. One month ago, on December 29, 2017, the odds of a March hike were just 50.7%. According to prevailing wisdom, the Federal Reserve has significant control over moneta…

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Tags: Gold

Looking at the latest Commitments of Traders report, bullish extremes continue in long crude oil, long British pound and long euro speculator net positions. While long crude oil and British pound positions have grown, long euro positions have fallen this week. The purpose of this report is to track how the consensus is positioned across various currencies and commodities. When net long positions…

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Tags: Crude oil

In this week’s COT report, most major currencies and commodities remain outside of bullish or bearish extremes. Instead, the only position that looks extreme is long crude oil. Over the past week, speculators have added to their long crude positions, and there are now 679,047 futures and options contracts long the commodity. Given the size of the long crude crowd, even a small pullback in crude o…

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Tags: Crude oil

Looking at this week’s COT report, long crude oil and short Swiss franc are once again in extreme territory. Notable extremes are bolded, and are highlighted when speculator positioning is more than two standard deviations above historical trailing 1-year and 3-year trends. Changes…

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Tags: Gold

Criticizing the US Federal Reserve for weakening the value of the US dollar is almost every financial spectator’s favorite past time. The fact that the US dollar has lost more than 95% of its purchasing power since 1913 (the year the Fed was established) relative to gold is a well-known fact. Given the loss of purchasing power over time, many believe that the Fed has failed in its mandate to main…

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Tags: Gold

Judging by reactions in the crude oil market, last week’s OPEC announcement exceeded expectations. Beyond an extension until the end of 2018, OPEC surprised many by including Libya and Nigeria as part of the cartel’s production limits. Despite earlier rumors regarding Russian reluctance to extend the cuts, the country agreed with Saudi Arabia’s push for an extension following King Salman’s landma…

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Tags: Crude oil

Looking at this week’s COT report, short crude oil and short Swiss franc remain in extreme territory. Notable extremes are bolded, and are highlighted when speculator positioning is more than two standard deviations above historical trailing 1-year and 3-year trends. This week’s C…

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Tags: Crude oil

The phrase ‘buy the rumor, sell the news’ is overused on Wall Street for a reason. Prior to significant events, prices tend to rise on rumors and then drop sharply following a highly anticipated event. Looking at WTI, the last OPEC meeting (May 25, 2017) is a great example of this pattern. Prior to the event, crude oil speculators drove WTI p…

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Tags: Crude oil

Crude oil remains in a bull market for one primary reason: demand growth continues to run ahead of supply growth. Looking over the longer term, crude oil prices have reacted sharply each time supply growth has moved above or below demand growth. The commodity cratered after the second quarter of 2014 once supply growth sharply outpaced demand. The bear market didn't end until the first quarter of…

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Tags: Crude oil