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?
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