USOIL Fundamentals say oil above $60 will look expensive very soon. Lots of new US production already in works to come online just as uncertainty surrounds future demand due to to tariffs. Rich hunting ground is now being given open season for exploration over major untapped reserves.I see mid 50s by next week and possibly a dip down into the mid $40 region within 30 days as large corporate buyers (users, not speculators) wait for more clear signals as to how economy will absorb the new tariffs policies globally.
This is part of Trump's plan as he promised much lower oil prices to offset tariffs and to keep the economy moving. Oil prices affect a HUGE slice of the GDP while tariff imports effect only 11% of US GDP.
The Federal Reserve and other analysts estimate that a $10 change in oil prices per barrel can swing GDP growth by around 0.3 percentage points annually. A sustained $45/barrel oil price would add 1.0% to U.S. real GDP growth over a year. It’s a big stimulus, almost game-changing alone, and a helpful tailwind if inflation and interest rates are a concern due to tariff wars.
Lower oil prices will allow the Fed to continue with their
easing monetary policy, probably even at an accelerated rate as lower oil would more than offset any tariff affects.
Stop looking at the charts and Ouija boards and start thinking big picture here. Big oil companies are about to get turned upside down and spanked like little bitches, while exploration companies will thrive. A paradoxical situation.
Short oil. Short big oil supermajors like ExxonMobil, Chevron, BP and Shell. Buy Oilfield Service companies like Halliburton, Schlumberger and Baker Hughes. Buy airline stocks, especially those with smart fuel hedging strategies like SouthWest (
LUV ). Sub $55 oil would be huge for LUV as they could hedge out very long term, almost guaranteeing profits for years while offering very low air fares and gaining more market share.My $0.02 cents.
