At the closing bell last week, the price of $WTI crude oil closed lower by about 0.25%. On the other hand, US equities, including the Energy Index (XLE), and the closed higher.
On the volatility front the Volatility Index $VIX closed lower again, for the fourth day in a row. That added to the possible risk on narrative. Oil was lagging and/or Equities (including oil stocks) were slightly overpriced.
You can visually see the spread that occurred last week Thursday and Friday, with $WTI and $BRENT seemingly ‘lagging’.
Most of this week’s price action has started closing the spreads back to the mean reversions of each of the markets in the chart.
Fundamental Consoderations
Geopolitical tensions are pointing toward escalations in the Ukraine- Russia war post the concert shooting in Moscow. The Israel-Hamas war doesnt seem to have an end in sight as well.
The Houthi and Somali shipping bottlenecks are also exercebating the commercial shipping problems of Europe and Asia, as rebels target US, Israel and Europe flagged vessels.
There could be big ramifications from the Apple antitrust case and the “cuts or not” question for the Fed will determine the fate of the rather expensive looking stock market.
These developing stories all have the potential to have big effects in supply and demand in the markets.
For now, in the short term, we are getting bids on oil towards last week’s high high.