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Here’s something I’ve been watching that doesn’t add up.
Crude oil is trying to stay above $100 a barrel, and you’d think that’s bullish as can be — especially with all the Middle East headlines floating around.
But gasoline is doing the exact opposite.
Wholesale gasoline is trading around $3.09 a gallon — before taxes and everything else you pay at the pump. Meanwhile, crude recently ran up past $101 to roughly $103 a barrel.
That divergence tells me something’s off.
When gasoline trends down while crude tries to move higher, it can signal weakening demand because fuel has gotten so expensive.
People buy less gasoline, and that eventually reduces demand for crude itself.
The broader economic picture adds to the concern. Retail sales may look strong, but durable goods have been weaker than expected.
Consumers might still be spending, but they appear more hesitant about major purchases. That kind of caution can spread into travel, transportation and energy use.
Stuck in a Political Tug-of-War
I think crude is going to stay stuck between $95 and $105 for a while because it’s being pulled in two directions at once.
On domestic political and policy news, it’ll come down. On Middle East news, it’ll move up.
Iran is really the tail wagging the dog here, with Ukraine adding another layer of uncertainty. Any development that threatens supply can quickly push a geopolitical risk premium back into crude.
These political shifts don’t stop at oil. We’ve also seen related news weigh on grain markets, which shows how quickly policy decisions and global tensions can ripple through commodities.
Energy, agriculture and currencies are all connected through transportation costs, trade flows and risk sentiment.
That doesn’t mean there’s no way to play crude — it just means you have to adjust your approach.
You can day trade the range, but trying to hold a directional position is a headache.
Longer term, I’d consider puts if crude starts to break down below support, but that’s a patient play. Over the next month or two, I expect plenty of chop.
How I’d Play This Setup
If you’re going to trade crude right now, I’d look closely at selling options premium.
Instead of guessing which headline will cause the next move, you can potentially collect premium while the market grinds between support and resistance.
Range-bound markets can favor premium sellers, but risk management matters.
A sudden escalation involving Iran, Ukraine or another major producer could push crude outside that 95-105 zone quickly.
Keep position sizes controlled and define your risk before entering.
This isn’t a clean trend — it’s a tug-of-war between softer demand and geopolitical tension. Trade it like one.
Geof Smith
Geof Smith TradingÂ
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