Hey folks,
If you just looked at the headlines today, you’d think oil would be ripping higher.
The EIA report this morning showed draws in both crude and gasoline — typically a bullish sign for oil. Less supply usually equals higher prices, right? (If you’ve ever wondered how I read these EIA reports, here’s a quick tutorial I shared a while back that breaks down exactly what I look for each week.)
Crude even popped a bit on the news…
But then… it pulled back.
Why? Because two forces hit the market harder than the inventory data could support:
- Saudi Arabia said they won’t cut production.
Instead of cutting production to support prices, Saudi Arabia is planning to keep pumping, which adds more supply into an already fragile demand environment. - U.S. GDP came in negative.
That spooked energy traders who were already nervous about weakening demand. A softer economy means less demand for oil.
Now here’s where it gets interesting…
Even though the market pulled back on the GDP number at first, it recovered — at least partially — because now traders are thinking,
“Hey, maybe this means rate cuts come sooner.”
Tying It All Together
So we’ve got oil down on oversupply concerns…
Stocks holding up on rate cut hopes…
And a market that’s still trying to decide if it wants to go up or not.
Tooting My Own Horn
Side note: A few weeks ago in my April 11 Weekly Wrap-Up, I mentioned that we might start seeing companies pull back on providing forward guidance this earnings season.
Well, as earnings season unfolds, we’re starting to see that happening as companies from General Motors (GM) and Stellantis (STLA) to Snap (SNAP), SouthWest Airlines (LUV) and more are both doing just that — opting not to issue guidance at all.
You’re going to see more of that as uncertainty stacks up and companies choose to play it safe.
Stay sharp,
—Geof
P.S. Oil may be under pressure, but Trump’s got a secret weapon and here’s how I plan to play it no matter which way it moves!
