Oil prices have had a nice run but with delusions dissipating and reality sinking in crude prices are slipping once again.
The recent stock market reflation rally was undoubtedly bolstered by a 27% ramp in oil prices. Since oil bottomed in February, Energy stocks (XLE) are up 15%. Then, on Monday, OPEC announced that demand would be less than previously thought in 2016 ... at the same time ... sidelined producer Iran boosted its output from 1 million barrels per day in January to 3.1 million. No small potatoes. That dashed the potency of previously discussed Saudi-Russia freeze talks.
The news for oil doesn't get much better from here, Hedgeye CEO Keith McCullough wrote in a note to subscribers this morning:
"Oil is down hard after failing at the top-end of what is now a $34.05-39.76 immediate-term risk range for WTI – and, again, if you’re thinking the Fed is going to be “hawkish”, don’t forget that means Dollar Up, Commodities Down – I’d stay with the better TREND setup than chasing Energy charts (i.e. Long Gold vs. Short Oil for 2016)"
Here's the latest on Gold from McCullough:
Want more insight on Gold and the Fed?
Bestselling author Jim Rickards (Currency Wars and The Death of Money) joins Hedgeye CEO Keith McCullough this morning at 11am ET to discuss his brand new book The New Case for Gold, along with global central bank policy, negative interest rates, currency wars and much more. Join us. It's free. (Click here for free access.)
