Caleb Franzen
Founder of Cubic Analytics
Crude oil should keep moving lower even after the midterms, because 2027 economic projections point to lower inflation. Around $100, oil was a good short since policymakers wouldn't let it break out ahead of the midterms and risk voter confidence. Some volatility is likely at first. 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
Crude oil should rise if the Federal Reserve raises rates next week, because a hike would send the stock market crashing. PPI came in line with expectations, leaving that game plan unchanged, and markets now price a 62% chance that Kevin Warsh's Fed hikes. 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 has almost certainly already hit euphoria, complacency is forming now, and it should go much lower. x.comÂ
The widening gap between physical and futures oil prices points to a tighter crude market and little relief at the pump. LSEG's chart shows Dated Brent near $150 a barrel against Brent futures near $105; proposed additions to product supply look marginal against the tightening market. x.comÂ
Crude oil's mid-term trend should turn lower sooner or later, a shift that would line up with a final ceasefire deal. Despite short-term volatility, prices are still distributing around the higher-timeframe resistance that marked the 2022 macro top. x.comÂ
Sustained high energy prices strain US farming, logistics, manufacturing and consumers, so crude oil should fall dramatically from its elevated level. Middle East and Russia tensions are lifting WTI, shown near $103, while Trump will likely step in at some point to reduce uncertainty. x.com x.comÂ
Crude oil stays elevated as long as there is no deal with Iran, feeding a vicious cycle in which higher oil keeps inflation sticky and pushes rates higher, breaking the bond market. To bring yields down, Trump must either convince the market oil flows are normal or end the war. 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