Howdy folks,
After spending last week teaching in Florida, I’m finally back home and diving right into what’s got my attention in the markets this week: oil.
If you’ve been keeping an eye on energy prices, you’ve probably noticed that crude oil has been making some sharp moves lately. And there’s a lot going on behind the scenes that’s driving these shifts.
Let’s break it down.
Sanctions and Tankers: The Russia Factor
The U.S. has imposed new sanctions on Russian oil, and they’re also targeting Russian tankers. Anytime you see restrictions like this on a major oil producer, it disrupts global supply chains and sends prices higher.
Russia’s oil exports are a significant piece of the puzzle, and when those flows are cut back, the world feels the ripple effects.
Germany’s Wind Turbine Controversy
As if that wasn’t enough, Germany is making headlines with its plan to tear down wind turbines to boost natural gas production. Yep, you read that right — dismantling renewable energy infrastructure to focus on fossil fuels.
For oil and natural gas markets, this could mean even more upward pressure. Europe’s energy demands are already high, and a move like this would only increase their reliance on traditional energy sources.
Oil’s Key Level to Watch
Here’s what I’m watching: Can oil get back above $80.30? That was the 2023 open, and it’s a critical level to reclaim if the market wants to push higher.
When the Russian sanctions were announced last week, /CL crude oil futures spiked as much as 5%, before closing with a 3% gain by the end of the day. That’s a sharp move for oil, which usually trades in a much steadier range.
It’s these kinds of swings that tell me there’s a lot of energy (no pun intended) building in this market.
What to Expect Next
With all these factors in play — sanctions, supply constraints, and shifting energy policies — oil markets are looking a bit more volatile than usual.
For now, I’m keeping my eye on that $80.30 level and watching how everything I’ve talked bout today influences supply and demand.
And don’t forget, every week, I’ve got my eye on the weekly EIA Petroleum Status Report.
Stay sharp out there, and I’ll see you in tomorrow’s update.
— Geof Smith
P.S. Trading as soon as the opening bell rings? You need to see this right now.