Higher rather than lower oil prices are expected by this fall.
This column last week
We did not have to wait till the leaves turn. Crude prices jumped as soon as I completed writing last Friday morning.
August WTI crude oil Thursday closed up +1.14 (+1.50%) to $75.77, and Aug. RBOB gasoline closed up +1.16 (+0.43%). Crude oil and gasoline prices Thursday added to this week’s gains, with crude posting a 2 1/2 month nearest-futures high and gasoline posting a 3-week high. The action by Libya to halt production at its Sharara oil field, its second-largest, due to protesters pushed prices higher. Also, a selloff in the dollar index (DXY00) Thursday to a 15-month low is bullish for energy prices.
Russia has now surpassed Saudi Arabia as the world’s largest oil producer. Saudi cut its production a million barrels per day (MBD) to stabilize prices. Russia has been heavily discounting its prices to finance its war in Ukraine.
Oil demand worldwide is expected to grow by 2.2 MBD this year. That brings world demand to 102.1 MBD. Demand is expected to continue into next year by another 1.1 MBD. But since when could anyone guess oil prices a year in advance. I remain bullish on oil prices and expect further increases.
Stock Market
A put is a bet on lower prices. A call is a bet on higher prices. The put-call ratio is a measure of bullish or bearish attitude. The lower the ratio the more bullish investors have become.
That ratio just hit its lowest level since the market top of December 2021. Investors (gamblers) are buying 2.5 calls for every put. One might think rational investors would do the opposite, increase their insurance against a market decline at highs by buying more puts. But social mood, not rational thinking, drives markets. The rebound has lasted longer than I expected but this put call indicator is yet another warning of an impending top.
Social Mood
Tom Cruise’s Top Gun: Maverick earned $700 million last summer just in the U.S. and Canada. Looks like he is on track to do that again with the seventh version named Mission: Impossible — Dead Reckoning Part One. No doubt Part Two next summer will do nicely as well.
Demand for Taylor Swift tickets in Paris and Lyons, France, crashed Ticket Masters computers. Where will she put all that money?
The newest Aston Martin DB 12 is priced at $250,000 and demand appears healthy. No wonder the markets are still headed up.
