Interesting discussion coming up. Carly Garner joins US senior commodity strategist and broker at De Carli Trading. So with oil, we have this interesting sort of dichotomous movement here. The oil price has fallen quite dramatically on the complicated reopening in China, just the thought that all these new COVID cases will delay the benefits from the reopening, while stocks have really bolted to the upside. I'm curious some which market is right or is it just the difference between
kind of spot considerations versus futures. Well, I think we're we're looking at a situation where market positioning is kind of driving momentum. And what I mean by that is a couple of weeks ago when oil test at seventy
for the first time. On the downside, we had a couple of news events that the term prices pretty quickly, and that was the reopening of China and also the Biden administration refilling the spr and so there were a lot of speculators that stepped in and bought those levels with the expectation of h much much higher crew prices. I mean, we all know for last year or so, speculators have been looking for a hundred dollar plus oil and they haven't gotten what they've looked looked for, but
they're they're willing to buy into those dips. And I think the fact that UM the rally fell short and kind of ran out of steam forced all of those those buyers out to the sidelines. And I think this probably continues. I think we've probably run some stops below seventy and test the highest sixties. But in the overall scheme of things, at this point, all the froth that was built into the market in the spring when oil prices went above hundred and much higher has really been
wiped out. If you look at the COT report issued by the CFTC, speculators are holding the smallest net long position they've held in several years. And usually when speculators have thrown in the towel on oil, that's exactly when the trend changes. So I expect somewhere between sixty five and seventy to be a place for the bulls to get some footing. So coy that bings NY to say, why a haven't the oil price has gone Further's everything priced in? That's one part of my question. The other
thing is OPEC likely to be happy? An OPEC clus likely to be happy with the prices as you're just predicting, and I'm saying, you know, if we don't look at the mean average, is it more case you're looking at the mode average of each member. Well, Um, one thing that I should point out is the China that comes
back online is not the same China that went offline. Um. I think they're experience experiencing some economic weakness, kind of similar to if you look at the travel situation globally and especially in the US, it's just not as fun to travel in two thousand twenty two or twenty three as it was two thousand nineteen. So even as travel was reopening, it wasn't as robust as maybe some people had had assumed it to be. So I think you're right, Um, OPEC would love to see oil prices hold in the
six seventy dollar area. If you look at a weekly chart for years now, almost two decades, seventy has really been a really significant pivot point. In fact, it's kind of been almost the line between bull market and bear markets. So this it's really important what happens here. But I do think that sentiment has gotten so weak and speculators are so sidelined that there's plenty of room for buying
power of prices firm up. And I think that's what we're probably gonna eventually get after a few rough days. If oil at some point sends a level of of sort of prediction of recession, about what level for oil would that be? For instance, you're talking seventy, the bulls will come back. What if it falls down into the fifties, And that's not impossible. I don't think that's going to happen on this path. But if we're talking um a year or two down the road, absolutely we'll see those
numbers again. And the reason being, I mean oil, um, it's a limited resource. But at the same time, we're getting better and better at pulling it out of the ground. So as long as politics get out of the way, we have plenty of oil to get. UM. It's just a matter of you know, time I'm going by and
and things working themselves out. And we've seen the whale market. Um, the last trip we had up to a a hundred fifty dollars a barrel in two thousand seven ended in thirty dollar oil within a year or so, so anything is possible. And one thing I've learned about crude oil is it never puts in quiet bottoms or quiet tops. There's always lots of fireworks, so you want to be careful either way. Well, one commodity which is not to producing any fireworks and
perhaps ought to have been, is gold. Given all the uncertainty and the risks we've had out then the last couple of years, are you surprised we have not seen it higher than where we it's And why is it not being seen as a haven anymore? What's the deal? You know? I agree with you, a pent I've been expecting gold to behave much better than it has. It's had a rough year considering the backdrop that is probably the best fundamental backdrop we've seen in gold almost ever,
and it still couldn't get off the map. But I think that what was going on is the dollar was holding it down and there were still a lot of um. The idea you that maybe bitcoin is replacing gold was still floating around. I think that's probably dissipated. I think that's old news, and I think we start getting some
hedging and investment dollars back into gold. Yeah, it could be that the dollar going down has driven gold up and uh and may help oil as well going forward because gold has gone from about sixteen fifty at the beginning of November up to eighteen fifty at the moment, so it's had a pretty good bounce here at something like fifteen percent or so. Anyway, Thanks very much, Carly Carly Garner, senior commodity strategist and broker at de Carly Trading.