Why the Oil Market Suddenly Looks Worryingly Fragile - Professional Investor Reacts

0:00As a bad day of the market, I can see a bearish trend starting on the spy. The 10 is now under the 20 prices now under the 50. And then I can see a bearish trend starting on the NASDAQ. Both of these have been unbelievably frustrating market for the last couple of months. And now they're looking like they're pointing down. Now we gave you this warning several days in a row. The reason being is that when we were looking at the sector intelligence map, we saw all this red coming through. When we were looking at the market breadth, we saw literally every sector except for utilities, which is still the case right now, coming through as being bearish. Why does that matter? Utilities are a flight to safety. People already knew this sell off was starting ahead of time and they were putting their money in utilities. Now with that being said, I just found this video over here. I said, why the oil market suddenly looks warringly, warringly, worrying, leaf fragile, oil is up over 6% right now, copper getting hit down 5% silver down 6% gold down 2% a lot's happening all at once right now.

1:05I'm sitting in cash and not effing up my portfolio, right? Sitting in cash and not effing up is a lifestyle when things are not setting up. Do you have to be in the market all the time? Nope. And when the market gets a little bit crazy like this, a little bit anxious, a little bit like, oh, you got to be kidding me. That was a great time to be sitting in cash. But you know what? I got to learn why the oil market looks looks warringly fragile right now. Off in February, the reaction in the oil markets has been surprisingly muted. When the Straits of Immers was first effectively closed, commentators and market analysts prophesized oil at $200 a barrel or higher, especially if the Straits stay closed for a prolonged period of time. But despite the fact that the Straits has been at least partly closed on and off, since then oil prices have not gone parabolic with Brent Crude, the International Benchmark oil prices generally below $100 a barrel for most of the past few months. However, early this week, after a run once again struck a number of tankers transiting through the Straits and the Hoothies apparently hit more oil infrastructure in Saudi Arabia,

2:05oil prices touched $99 a barrel. They're highest since late July. So in this video, we're going to take another look at the global oil market and explain why it suddenly looks significantly more fragile than it did not too long ago. Dole Trump and Benjamin Netanyahu promised a total regime change in a run, but so far that hasn't happened. We explain why Trump was wrong and what post-war Iran leadership might actually look like in the ninth issue of our magazine too long. That's just one of the articles in our longest issue ever. Subscribe to get your copy by clicking the link in the description. So to understand my oil prices might be about to jump, you need to understand why they didn't really jump, at least not as high as many people expected them to during the first phase of the war between March and June. So basically two big reasons the oil prices didn't go parabolic back then. First, the world was able to dip into unusually well stocked inventories. There was something like 8.4 billion barrels in global inventories at the start of the crisis, according to JP Morgan, well above the historic norm.

3:07And these were drawn down an unprecedented rate to boost global supply and thus keep down prices. Second, China, which is usually the world's biggest oil importer, suddenly caught its imports by that 4 million barrels a day, providing some much-needed relief to the global oil markets. Some of this seems to be because the Chinese economy is apparently very good at adapting to oil price shocks. Public electric vehicle charging jumped by 17% between April and May for instance, suggesting that Chinese drivers were essentially switching to electric in response to higher gas prices. But most of it was because China was drawing down its own massive oil stockpiles, which have been building up over the past couple of years. According to an analysis by Bloomberg, for instance, roughly half of the reduction in Chinese demand was a result of China unloading its stockpiles. In short, the way we're trying to make is that the main reason that prices stayed relatively low and the world was able to avoid an acute oil price shock is because everyone, including most importantly China, was dipping into their stockpiles. However, this obviously couldn't go on forever. And by June, many stockpiles were running dangerously low. Trump actually admitted this publicly after a run in the US signed their so-called

4:07Memorandum of Understanding, or MOU, in an attempt to justify his decision to end the war, at the G7 summit, Trump claimed the oil reserves were going to run out in about four weeks, and that there would be, quote, Bedlam. Also, we run out of reserves in about four weeks. They're reserves all over the world and we would really run out. It'll be a time when you wouldn't be able to get it and you want to see Bedlam. Unfortunately, this didn't really. Let's take a look over at the energy sector real quick. XLE is actually down today. So the energy sector itself is actually down today. However, if we jump into the arca breath again, this has gone bearish over here on the energy sector. Look at this. We can see it's flirting with crossing bullish bearish back and forth, but we are getting more uptrends in the sector. We are getting more uptrends in the sector. Let's cycle a little deeper. Let's go to the sector intelligence map. Let's go over to sector list view. And energy is the top. Energy is the number one top.

5:08Now tomorrow, I think tomorrow, we're going to have the waterfall view, which is going to show you how these are rotating over time, which is going to be amazing. But energy started picking up a few days ago. So if you were in energy stocks, you were probably a pretty happy boy lately. And you're probably a boy because 92% of our audience is meant. So there you go. Oil and gas refining and marketing have been the best performer recently. And it is growing in buy signals. Oil and gas equipment and services is also growing in buy signals as well. So let's dive a little deeper. Let's dive a little deeper. Who are some stocks that are in this area? All right, let's sort by average volume. UGP, EBS, Philip 66, Dino Dino, Valero, marathon. Let's take a look at these guys. All right. So yeah, been pushing up higher by signal has come through.

6:09By the way, these buy signals are going to be renamed to bullish momentum triggers or bullish momentum alerts, bullish momentum signals, whatever. But that is definitely a change in the character of the fear and greed of this stock. Next, pbf, bullish momentum signal just lit up as well. And you've got PSX. Now, this one has been greedy, greedy, greedy. Oh my goodness. Out of 100, this is flirting between 95 and 96 the whole way up. So it doesn't have a lot higher to go on the fear and greed scale until we start resetting the fear and greed scale for this guy. For sure. All right. Page not found for Dino Dino and refresh that. There you go that buy signal right there. Absolutely moving boom, boom, boom, boom, boom, boom, boom, boom, boom, the whole way up. This is Dino Dino. And then you've got another one here, Valero, buy signal, bullish momentum signal in place,

7:11all the way up and then NPC marathon refresh that one as well. Oh, yeah, look at that guy go boom. I like it. Now this is 95 96 out of 100. So the energy sector really has been on fire. Absolutely. Fly in the MOU was widely panned by both the American press and political class as essentially a surrender document. This at least partly explains why Trump has since torn up the MOU and restarted the war with Iran. Trump was also presumably somewhat emboldened by the muted reaction from the oil markets last time round. While oil prices went higher than American voters would apparently like, they didn't go so high as to upend the economy. However, Trump's confidence here might be somewhat misplaced because neither of the two big reasons oil prices stayed low last time still hold up. First and most obviously global inventories are very depleted. You can see this if you look at America's strategic petroleum reserve or SPR for instance, which is probably the world's single largest reserve and has played a key role in stabilizing oil markets in recent months.

8:11According to latest EIA data, the total volume of oil in the SPR has fallen from about 450 million barrels before the war to 287 million barrels last week. 280 million barrels might not sound that bad, but the actually accessible amount is actually significantly lower because you can't totally deplete the SPR. The oil is stored in a series of vast underground salt caverns that already way past their shelf life. And you need absolute minimum something like 160 million barrels in there all times to maintain operational pressure and probably over 200 million barrels if you want to stay on the safe side. Anyway, the other thing is that Chinese imports, which is explained earlier drops deeply during the first phase of the war, are now picking back up. Having fallen from about 50 million tons pre-war to a low of below 30 million in June, China's oil imports from the Persian Gulf ticked up to about 40 million tons in August. More generally, China's total crude imports, which were running at about 12 million barrels a day before the war, jumped to 9 million barrels a day up from a low of 7 million in June. If trends continue, let alone of China's oil imports return to anywhere near pre-war levels, the market will suddenly look a lot tighter.

9:18Now to be clear, this does not mean the oil prices are definitely going to spike. And if the past few months have taught us anything, it's that predicting oil prices is a futile endeavor. And let's perhaps you can fork out $100,000 a month for early access to Trump's truth social posts. It's also worth noting that there are other things playing downward pressure on prices. Non-OPEC producers, including the US, Canada and Guyana, are set to increase output by a combined 1.4 million barrels per day this year, according to RiceStat. While Russian exports have also recovered somewhat from their lows early this year, when Ukraine's campaign against Russian oil infrastructure was in full swing, Iran has also been talking up the prospect of some sort of a call with a man, which would restore some traffic through the street of almost, which collapsed to zero after Iran's attacks on oil tankers a couple of days ago. Finally, it's worth noting that prolonged periods of high oil prices usually end with a crash because the world by now. I have mentioned this before. I am completely axing the energy sector until this whole Iran debacle is is over. Why? Here's exactly why, right? You feel like an absolute genius. Everything is amazing.

10:24God of a... Oh, everything's going great. Going great. You have got to be kidding me, right? It's just one after the other after the other. Very, very volatile. And of course, volatility does lead to profits if you can trade on the right side of it. The problem is that because of somebody who can sit on the golden toilet with his phone and completely move all these markets up or down, now I know that it wasn't his entire term here. I'm not trying to say that. What I'm saying is this kind of volatility is happening. We're living in the midst of it. So I don't want to take that risk. It's not worth my time, my money, to put at risk in a sector that is all over the place and can change on a dime. So I'm just going to hang out. I'm just going to do something else. Right? You don't have to trade everything all the time. You don't have to... In fact, you can completely ax off a whole sector if you don't want to trade it. And while all this Irene Bloney's going on, that's what I'm going to be doing.

11:25It's ways to curb its oil usage, meaning less demand. And because more expensive producers, like, say, shale producers in the US, kick into gear to take advantage of higher prices, meaning more supply. Nonetheless, the point we're trying to make in this video is that the two main factors that put downward pressure on prices last time around are no longer present. And this is materially increased the odds of some sort of a cute energy crisis in the near future. Especially given that Iran knows that it needs to accept what leverage it has over the Trump administration before the midterms. I've already told you about one of the articles in the next issue of too long, but there's something on it. Is it just a picture of the rest of that? Let's just skip forward. Incent straight to your inbox. Plus, we actually earn more from the Bipotent TV page, the Wars it, and of Trauma Superb New Writers, but come a too long subscriber today. All right, so I guess that was it. So at the end of the day, you have to be able to sleep at night. Well, that's what it that way. You have to be able to sleep at night. And while you've definitely had an opportunity here in the energy sector, there are there are lots of opportunities to the energy sector.

12:27In fact, this is one of the few areas of bright shining stars, right? When you look across a lot of the other sectors lately, not been so great. Not been so great at all. So of course, you know, for me, I'm going to continue to sit and cash and not f up as long as I need to, right? Sitting cash as long as it takes. I'm not going to be able to put my risk, my money at risk, until I can see things slowing down. Now, we are actively working on plans that give you the buy and sell signals. We talked about the buy and sell signals inside of outlier, but that is just really the momentum indicators to go along with that. We are working actively, like right now, right now on these buy and sell signals with the full back tested plan that you can be able to import into your into your outlier strategy library coming very soon. So I'm going to get back to work in there, but you're going to click this video. You're going to click this video. You're going to watch more and it's going to be amazing. It's probably going to change your life. It's going to be it's going to be tremendous. Click this video. Watch more. Be sure you subscribe and we'll talk soon.