Trading energy and energy stocks this week have been a dangerous experience, as oil markets sloughed off more than $3 a barrel on little more than a whim. DOE reports showed a certain stockpile increase, but those reports have been rather irrelevant for years, so pointing to this particular report as a reason for the quick drop would seem a major overstatement I won’t be foolish enough to make.
Much more believable would be the one-sided nature of the trade for the past week and a half, with traders looking for risk assets to again take the lead in a stock market that has continued to float upon a layer of liquidity and make new highs almost daily.
But risk assets have done anything but cooperate – copper is bad, gold is bad as are the equally commodity based stocks like miners and materials. With traders piling into oil as some sort of hedge for Kim Jung Un’s latest temper tantrum, it’s not hard to imagine the world being caught long and paying for it – as markets are wont to do -- punishing traders who even for a moment thought they’ve got it all figured out.
What I can say to readers of Oilprice Premium is that the overview of markets I’ve been providing has been a useful one, if you’ve read closely: I warned very clearly of the collapsing spreads between West Texas Intermediate crude and the European Brent Crude benchmarks and told of the likely contraction of refiner margins that…