A Crude Reality: Oil Price Hit 2023 Highs

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I mainly cover the S&P and Nasdaq futures, but I also follow crude oil. When crude oil went negative on April 17th 2020, I told the PitBull I wanted to buy oil calls, but was locked out by AMP futures. It was a once in a decade trade — maybe a once in a lifetime trade — that just wasn't meant to be.

I told the PitBull that we will never see those prices again in our lifetime — and I’m not just talking about when oil went negative, but also the low prices we saw all around mid-April 2020.

I know this makes me sound old, but I actually remember the lines at the gas station during the oil embargo in 1973 and 1979. My parents went to the same Mobil gas station for over 30 years. These embargoes are always a geopolitical event, but something is happening right now. Despite steep discounts, Russian oil imports to India have fallen to a seven-month low as New Delhi turned to Saudi Arabia during the course of the war in Ukraine.

I don't pretend to know it all, but there is little doubt that oil and oil production has been weaponized and I don't think it's going to stop. Russia and Saudi Arabia are widely expected to extend their voluntary 1 million barrel per day (bpd) cut for a fourth consecutive month into the October 4th minister meeting, while we still have record low oil reserves in the US and high demand mixed in with inflation and higher rates.

In a nutshell, I don't think oil prices are going down. From Taiwan to China to Iran to Ukraine, it doesn't seem all that impossible that some flash point couldn't occur that sets off something wider. And if it occurred in the Middle East where the Strait of Hormuz was shut down, the price of oil would double.

(I have put some oil charts below in the technical section).