David Hunter
Chief Macro Strategist at Contrarian Macro Advisors
Oil-related stocks will be hit hard over the coming months and the next year, so it is way too early to buy them. Only later, in the next cycle, will oil-related stocks, including oil service names, do very well. A follower summarizing the call describes oil falling first, then rising toward 500 in the following cycle. x.com x.comÂ
Extreme bullishness about an oil shortage is a warning because oil has tended to return to around $50 within 12-18 months after such talk. Calls for a 'great oil repricing' appeared today, though they may not be widespread enough yet to mark the same setup. x.com x.comÂ
The oil trade is over because crude can no longer make higher highs, even with Middle East crude exports back near their peaks. Oil is trading around its average price of the last eight months and set a lower high in September, so it is only a matter of time before the market gives up. Crude looks about to fall through the floor, with rates following and high-beta stocks then going vertical as every dip gets bought. x.com x.com x.comÂ
Crude oil and the XLE energy-sector ETF would be buys on a pullback because uncertainty over a real military strike could hang over the US market from the midterms through year-end. Only an actual strike or a true peace deal would settle that uncertainty. x.comÂ
Plummeting base costs and weaker demand from struggling economies abroad should push crude oil lower next year. The same forces will also weigh on many other commodities and services. x.comÂ
Oil will come down significantly, because Trump will eventually make a deal with Iran and put the conflict to bed. x.comÂ
US energy stocks still merit exposure despite today's selloff, because the war premium in oil will likely not go away soon. x.comÂ
Exxon Mobil and Chevron are among the highest-quality energy stocks and are long-term holdings, so a quarterly earnings decline is just noise while the thesis is intact. In cyclicals like energy, the approach is to buy only at the deepest cycle lows, never chase, and hold until the thesis permanently breaks. x.comÂ
Crude oil looks set to punish late buyers. Sentiment feels like maximum pain for oil shorts, so the trade is to take the other side of it. x.com x.comÂ
Oil stocks are worth buying on any dip because this is the biggest energy crisis, and its shock wave has not yet reached the US. Some oil producers are hurt by the Strait of Hormuz blockade, so weakness can be company-specific, as @StockyPlatano's planned short of Occidental Petroleum suggests. x.com x.comÂ
Crude oil looks set for a pullback because energy is more overbought than 95% of sessions in two years while market stress is deteriorating. Defense and drone sectors that rallied on the same geopolitical thesis are already breaking down. IEA members are releasing a record 400 million barrels of emergency reserves, and $1M of put spreads target a roughly 10% drop by mid-April. Oil also trades outside its Monte Carlo probability cone, though 8 of 9 models still say bullish. x.com x.com x.com … Show more
