China, Crude Oil, Equities, European Union, Finance, Global Recession, Iran, Iran Nuclear Deal, News, Oil, Oil Production, Oil Short, Recession, Russia, Short, Short Oil, Stocks, United States, WTI Crude Oil
- Oil is trading at a premium based on historical data points.
- U.S. supply is beginning to come online again.
- Increased oil demand Oil for energy demand in the EU is likely only temporary.
- Global recession risk is rising.
- The Iran deal is likely to close.
For some time now, I have believed the oil market to be broken, where data is ignored and outdated core beliefs of the market rule. I first took action on this belief on March 15, 2022, when I initiated a short position in WTI crude (CL1:COM) using WisdomTree WTI Oil 3x Short Daily ETP in USD ($3OIS) through a margin product. I have since sized up my position on 13 separate occasions. I don’t usually disclose my position in such detail, but I believe such a controversial issue must be read with disclosures in mind.
Before diving in, I need to clarify that this article will focus on WTI crude prices, and any reference to oil price uses the price of crude.
For ease of reading, this article will be broken into seven separate points:
- Oil is trading at a premium based on historical data points
- U.S. supply is beginning to come online again
- Global recession risk is rising
- Increased oil demand for energy in the EU is likely only temporary
- The Iran deal is likely to close
- Russian oil is still flowing
- Conclusion and risks to thesis
Excel Source Documents
Disclosure: I/we have a beneficial short position in the shares of CL1:COM either through stock ownership, options, or other derivatives.
Additional disclosure: While I express my opinion in this article, only you can determine if a specific strategy is right for your portfolio. You should always do your own research before buying, selling, or shorting any stock. Any charts, graphs, or tables not specifically credited to another individual, company, or institution were created by the author using his own research.
While I am not directly shorting crude oil, I have invested in a 3x reverse daily ETF using a margin like product that enables me to profit when crude oil decreases in price. This is an incredibly risky method of investing even experienced investors should think hard before initiating.