I don’t want to brag (who am I kidding, of course, I do!) but last week, with WTI holding just above $40, I predicted that a significant drop was coming. That was on Friday, and here is the chart for the main crude oil futures contract, CL, since Monday…
The three factors that I highlighted in that piece, a weak economy prompting demand fears, political uncertainty, and over-supply, all combined to cause the initial move down. However, those losses (or gains for those of us that were short or trading with a short bias) were added to significantly last night as the news broke that Donald Trump has tested positive for Covid-19.
Given just how Trump has divided America, overreaction to that news at both ends of the political spectrum is to be expected. There will be some who cynically and heartlessly delight in the President’s misfortune. Meanwhile, those that have been denying the very existence of Covid-19 or maintaining that it is all some Democratic hoax will undoubtedly dig deeper into their conspiratorial holes. For them this will all be part of some Deep State plot to take over the government.
That is, as I said, to be expected. What is a little more surprising, though, is that crude oil lost a couple of bucks after the story broke.
After all, markets are supposed to be apolitical, and a commodity like oil is supposed to trade on the fundamentals of supply and demand, right? It is hard to see how Trump’s health can…
"Oil" - Google News
October 03, 2020
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What Trump's Positive COVID Test Means For Oil - OilPrice.com
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