Despite optimism from Chinese data overnight, forecasts for lower OPEC+ output, and a weaker dollar, oil prices are tumbling this morning with WTI back below $64.50...
Some have suggested the drop is due to investors also considering the potential impact of higher taxes and how that could affect corporate profit growth. President Joe Biden is planning the first major federal tax hike since 1993 to help pay for a long-term economic program, according to people familiar with the matter. The White House is expected to propose a suite of tax increases, mostly mirroring Biden's 2020 campaign proposals, according to four people familiar with the discussions.
We do note that as prices tumble 'mysteriously', that WTI swap dealer shorts are at their highest since 2018...
And WTI's nearest timespread flipped into a bearish contango structure - signaling oversupply - after stockpiles in the U.S. grew in recent weeks.
The silver lining, if this trend reversal holds, is we may avoid $3.000 gas at the pump becoming the norm.
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