The price of oil... on a chart, annotated...
The oil price trend is a simple line projecting higher...
The initial rise began on November 2, 2020... election day. It has long been Democrats stated policy to drive oil prices much higher, as a part of forcing "de-carbonization"... in the expectation that to make "green" alternatives "cost effective"... it will be necessary to impose artificially higher "carbon" prices... hence, "carbon credit trading" etc., as market frauds intended to operate transfer schemes shifting the value "harvest" in energy production from producers... to market manipulators.
Out the gate, the newly selected Biden Administration was inordinately hostile to the energy industry, and that has remained a constant. Pipelines were cancelled, leasing was terminated, LNG terminal projects were shut down.
Packaged along with the overt hostility to energy suppliers, was fiscal profligacy fueling a rip roaring inflation... paired with a pro-inflationary monetary policy intended to deflate the value of the debt, and a knowing decision to lie about the inflation existing... in order to avoid being forced to doing anything to address it as a real concern... The language gained a new meaning for the word "transitory"... in context of sarcasm... and trust was squandered... edging us ever closer to financial Armageddon...
As the reality in the nature of the impacts resulting from implementing that policy set began to become widely understood... for its electoral risks... Democrats began "taking action" to combat rising energy prices...not by enabling greater domestic production to foster a robust supply, but, first, by orchestration of occasional SPR releases as a PR ploy to show "doing something" inconsequential... paired, second, with aggressive market price suppression efforts, and, third, by begging OPEC to produce more, asking them to impose on us a growing dependency on foreign oil.
With each subsequent effort in theater paired with market price suppression efforts forcing price to deviate from the trend line... you can see a series of steepening angles crafting a classic "megaphone" pattern... right up until the last event... a coordinated release of 60 million barrels (~ a days worth of supply) about which I had noted just before it occurred... that the market had become inured of the pretense... and was increasingly unlikely to cooperate in allowing the ploy to work in suppression of the price, or to work in forcing sustained supply reductions (and even higher future prices) through the imposition of artificially lower prices limiting incentives...
That proved prescient, as the market response to another attempted round of price suppression was not to roll over lower again... but to break out of the megaphone pattern... and cure the gap generated between price and market trend.
Note the continued upward trend in the upper bolly... and the lower bolly breaking higher to craft a steeply rising upward channel...
The drivers of the trend are: Biden's feckless energy policy, open hostility to the industry, coordinated fiscal and monetary policies foster hyper-inflation, and generating massive systemic risks, including currency risks, debt default risks, financial stability risks,,, and, of course, paired with an incompetent yet aggressive foreign policy that has postured aggression with weakness, and invited the initiation of WW III, now in progress.
The opening of war drove a risk trade... that obviated the impact of a new round of price suppression efforts... and, added on top of the other drivers, began closing the gap between the suppressed price and the trend line. But that trade was quickly overwhelmed by the "sanctions" trade... as the response to the war sought to directly remove ten percent of global supply from the market... while destroying the Russian economy... ending transfer of payments and access to financial transactions... also ensuring that production will rapidly grind to a halt and likely will be destroyed... By repudiating convertibility of Russian dollar reserves, the policy has guaranteed the accelerating destruction of the value of a dollar...
The ludicrousness of Biden openly begging Iran and Venezuela to help replace Russian supply... rather than enabling domestic producers to meet the need ? That surreal vignette... only further highlights the validity of the trend line...
Even if the war ended tomorrow... the damage done already is unlikely to ever be undone... much of it cannot be... disruptions to global trade in energy are now hardwired... my guess being "will be forced to be recognized" in about two weeks... likely with uses of SPR's soon not to be used as "theater" in price suppression efforts. At the same time, ripples in the financial system will take about the same amount of time before "the bodies start floating to the surface" (Rickards) and disruptions of transactions begins exposing the damages done to counter-parties in the trade... among many other likely "unintended consequences" yet to emerge... The politicians are already exhorting "be prepared to sacrifice"... while not being at all honest about what they know the impacts will be... vastly higher prices coming...while there is vast potential that they have no idea what the full extent of the impacts will be... even before considering the probability of "contagion" initiated by the events... not just in the financial system... but in "the failure of global order"... and... "unknown unknowns"...
Some in the market today expect...that spike was "the peak" in oil ? LOL !!! Far more likely is that prices rapidly resume tracking higher on the trend line, from here.. likely within the coming week.... and then may deviate above that trend line from here... as risks already realized in fact... begin forcing the real market impacts imposed to be realized in financial markets... in a lagging function...
And, that's not considering... things could get vastly worse... and do so very rapidly... if the war is not contained and instead begins to harden, crystalize and force other "brittle" failures...
Anyway... here's the chart... which, with the above, explains much in "where we are" and "how we got here" in such a short time...but, beyond noting that the trend line seems to be "about right"... it does not enable "price projections"... I will note re "projections"...that you might expect oil to continue higher on the trend line... until the market crashes spectacularly... or until unexpected events forcibly impose other vectors...
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