Crude Oil Volatility Signals Major ‘Rebalancing’


The lack of demand in the world Crude Oil market has set it up to be forced into a necessary rebalancing over the coming weeks as rapidly filling storage leads to significant production cuts and higher prices.

See price volatility continuing high in the weeks ahead, as retail investors exit.

There a limited amount of storage left to fill, so production will need ‘choking’ to bring the market into balance, thus setting the stage for higher prices once demand recovers. This inflection will play out in a matter of weeks, not months, with the market forced to balance before June.

This violent price move is symptomatic of an unprecedented surplus testing storage capacity, this dramatic 2-day collapse in the May and June futures owes entirely to the binding constraints of trading commodity futures into expiration. Traders wanted/want out of delivery obligations at all costs.

Tuesday, President Trump said he has asked his cabinet to devise a plan to inject cash into the ailing US Crude Oil drilling industry to help it survive a historic collapse in prices.

We will never let the great US Oil & Gas Industry down. I have instructed the Secretary of Energy and Secretary of the Treasury to formulate a plan which will make funds available so that these very important companies and jobs will be secured long into the future!” President Trump Tweeted.

Last week, Energy Secretary Brouillette told us he is working with Treasury Secretary Mnuchin to 2X the size-limit on loans available to mid-tier US energy companies under the recently passed CARES Act stimulus package to $200 – 250-M.

In this crisis there is opportunity, check our daily column Sitting on a Pile of Cash? For Top Trade Ideas

Tuesday, the major US stock market indexes finished at: DJIA -631.56 to 23018.88, NAS Comp -297.50 to 8263.24, S&P 500 -86.60 to 2736.56

Volume: Trade on the NYSE came in at 1.0-B/shares exchanged

  • NAS Comp -7.9% YTD
  • S&P 500 -15.3% YTD
  • DJIA -19.3% YTD
  • Russell 2000 -29.0% YTD

HeffX-LTN’s overall technical outlook for the US major stock market indexes is Neutral with a Bullish bias as stock are very oversold in here.

Looking Ahead: Investors will receive the weekly MBA Mortgage Applications Index and the FHFA Housing Market Index for April Wednesday.

Have a healthy day, Keep the Faith!

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