I Am Probably Early But I Am Getting Really Bullish
The oil market is hard. If you think otherwise, then you are delusional. In June, the bullish sentiment in the oil market and the energy investors turned almost euphoric. People were slapping predictions of $150+ oil all the while assuming that 1) Russia's oil production was set to decline dramatically and 2) the US SPR release wouldn't have much of an impact.
Back then, I wrote an article titled, "The Oil Market Is Going To Be Rangebound." The conclusion of that article was that the oil market already figured out the upper bound of where prices could go, so it was going to be in the process of figuring out the lower bound.
My mistake was assuming a much higher lower bound than where the market is currently trading, and this mistake was further compounded by the fact that the June US oil demand data came in ~800k b/d higher than what the weekly suggested. The data invalidated the assumption that high oil prices are "materially" impacting demand, so it changes the calculus for how the oil market "should" function going forward.
The conclusion, however, was the same for energy stocks. We were going to go through a "slow" and "turbulent" summer period. Once the market figures out the lower bound, we thought energy stocks would go up.
Fast forwarding to today, the macro market is wreaking havoc on the oil market. US Dollar continues to rise leading to more fear and more liquidation across the board. Using the signals we laid out in this article, the bullish signals have already started to appear, but flat prices continue to drop.
But just as participants turn super bearish and expect things to worsen, the very thing that participants thought would happen in size is starting to happen. Russia's crude exports are starting to drop: