Crude oil has been acting strange lately. If you’ve been keeping an eye on the charts, you’ll know what I’m talking about.
The past couple of days have been a whipsaw for crude, and it’s left a lot of folks — including me — scratching their heads.
Yesterday, after the EIA report showed a 1.4 million barrel draw in crude inventories — offset by a 5 million barrel surplus in gasoline — I expected crude oil to sag. And initially, that’s what we saw.
But then crude perked up and reclaimed the $70 level, defying the fundamentals.
Today, it got even weirder.
Crude’s Whipsaw
This morning, crude oil (ticker /CL) started selling off, as you might have expected based on yesterday’s inventory data. It looked like the market was finally reacting to the gasoline surplus.
But then, out of nowhere, crude turned around at 11:30am Eastern and shot right back up.
What’s driving this? That’s the big question.
Here’s what we know: OPEC hasn’t changed anything. Production levels remain the same, and that was already baked into the markets.
Crude has been hovering around $70 for the past couple of weeks, and this level seems to be acting as a magnet. But the sudden reversal today? That’s something else entirely.
Why This Matters
For traders, whipsaw movements like this can be tricky. They’re unpredictable and can catch you off guard if you’re not careful. That’s why it’s important to approach these markets with a clear strategy and a healthy dose of patience.
If you’re trading crude oil directly, you’re probably looking at the /CL futures contract
But there’s another way to play it: the XOP ETF. XOP tracks oil and gas exploration and production companies.
It’s not a one-to-one match with crude oil prices, but it’s a good proxy for the broader sector.
Think of it like GLD for /GC gold futures or SPY is to /ES S&P 500 futures.
What’s Next for Crude?
At this point, all eyes are on crude’s ability to hold above $70.
If it can maintain this level, we might see a push higher as traders start focusing on longer-term supply and demand dynamics rather than short-term inventory noise.
But keep in mind: crude’s behavior the past couple of days has been anything but normal. If you’re trading it, be prepared for more volatility.
This is one of those times when having a solid plan matters more than ever.
Let’s see how it plays out.
— Geof Smith
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