Oil Prices: Why the Market Isn’t Panicking Yet

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Making sense out of oil prices. Question that’s bouncing around out there based upon again the the back and forth when it comes to are we still fighting with Iran? Are we gonna stop fighting with Iran? Is it gonna be over? What’s going to happen next? well, let’s let me just put it this way. Okay. delivery for oil is higher than what the futures are saying. But

You know, Chris, you’ve been saying here on the program inventories are down. Why haven’t we seen it spike to 150 to 170 dollars a barrel? First and foremost, okay. could that happen? Absolutely. You know what else can happen as well? Oil could go in the opposite direction. Oil could we get we can get oil back down to sixty dollars a barrel. Can happen. But I tell everybody a little story.

Okay, this is going back to the first Gulf War, George H.W. Bush. Nassim Nicholas Taleb talked about this in his book, Fooled by Randomness, and he also talked about it and anti-fragile as well. And he watched, he was there, he watched as all of these elites and learned people on Wall Street, you know, there was a there was a lead up.

There was lead up to the war in Iraq before it actually happened. And what happened over that period of time is inventories were built up. Inventories were built up behind the scenes. But anyway, the traders on Wall Street, again, they had their maps on the wall and they had their conversations. They were they were basically betting on a super spike.

in oil once the invasion occurred. The exact opposite happened.

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The exact opposite happened. This is real world examples. This is you, you might you may be, you may think you’re right in so many ways, and you can be dead wrong. they didn’t consider the amount of supplies that were built up and how that was taken into consideration. Again, many countries out there, we’ve hit our strategic petroleum reserve. China has theirs, Japan has theirs. Again, it’s been keeping everything afloat.

The reality is that I I don’t know what, you know, I could be talking on this podcast right now and the whole thing could be over and I I wouldn’t know about it. Maybe this afternoon, maybe this weekend. I don’t know. at that point in time, things can correct very quickly in the opposite direction that can. That can occur. And this is why you’re seeing the prices for delivery are higher. What you have to pay right now versus it what the futures.

Are saying because of this lesson. Many people learn their lesson from what happened there in the first Gulf War, and they’re saying, Well, you know, I better watch because it it the thing could go down. I’ve actually I’ve actually had traders tell me that they think that they’re gonna see fifty dollars a barrel oil before they see a hundred and fifty dollars a barrel oil. Again, I don’t like playing with fire.

And I’ve talked about never letting risk lead to ruin in these situations. I do think the president understands that he can do a few things to kind of change the direction very, very quickly and almost make himself out to be almost kind of like a hero to some degree. people see the you know, the price that they’re paying at their pump drop very, very quickly. Again.

Politics. They’re gonna take they’re gonna I I did that. Look at what I did. I we told you so, and it’s gonna be a step in the right direction. So that without without a doubt can happen. But again, you know, this is again, this is the risk you take when you got to weigh all sides in a trade. Our adversaries, they know this too.

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They know this too. And they also, you know, know what the the president wants, what he needs to have happen. And again, it helps their negotiating standpoint. last thing in the world, you know, and I’ve talked about this ad nauseum. $150 spike higher, you’re talking global recession, massive slowdown.

That that can’t happen. That can’t happen. So again, I, you know, a glass half full, which I just talked about in the jobs report. I’m kind of keeping a glass hat full when it comes to this conflict and the hopes that cooler heads are going to prevail sooner rather than later. Watchdog on Wall Street.com