The White House oil strategy is baffling
Here's the thing: $80 oil isn't expensive.
By hitting the panic button so early in the cycle and fighting a losing battle, the White House is showing that it's clueless on oil.
The execution of this move is also a mess. By leaking it for weeks, they let the market price in the worst-case scenario. Then we find out that it's not really 50 mb. It's 32 mp that will need to be paid back and an acceleration of 18 mb that was already announced.
If you're an oil bull, this is now one more headline that's out of the way. As a trader, this was such an obvious 'buy the fact' trade and that's exactly what's happening. Justin spelled it out immediately after the news:
Don't be surprised to see oil start to gather a bit of traction back towards the upside by the end of the day. I mean the key headline risk is out and what has been a threat since last week is over and done with, and with little reaction seen in oil prices.
At the end of the day (or the end of next year) this will simply hand over more power over oil pricing for OPEC+ countries. And those countries have huge holes in their budgets that can only be bridged by higher oil prices.
I've been banging the drum on oil longs for a year. WTI is now higher on the day, up $1 to $77.70.