Oil cools

Disclaimer:  Nothing in this blog post, or in any other post on this blog, should be construed as personal investment advice.  This is for entertainment only and for my own amusement in particular.  If you want investment advice, hire a financial advisor.

 

After last night's spike to well over a hundred bucks a barrel, oil has pulled back to the mid-eighties.  Since the global economy runs on oil, lower oil prices are good for almost everyone.  This should ease political tensions a little, both domestically--in numerous countries--and internationally.

AI-related stocks rebounded a little from their 2026 selloff, but volume was modest, so I'm not convinced these stocks have bottomed out.  Maybe they have, but the verdict isn't in yet.

On a related note, Henry Johnston has an article worth reading:

https://www.rt.com/news/634271-gold-price-iran-oil/

RT has some absolute garbage editorialists, but Johnston isn't one of them.  On the contrary, if you only read one person at RT, it should be him.  He's one of the sharpest tacks in the drawer.  It's actually quite amazing to find a guy like him at any "newspaper" site anywhere in the world.

I think his analysis in the above article is sound, and I would only add that another reason gold hasn't spiked up in recent days is because it was already overbought and is in its pullback/consolidation phase (as I previously blogged about).  Fundamentals are hugely important, to be sure, but the price action is where the rubber meets the road at any given moment.

So what happens next?  Good question.  Depends on tanker traffic transiting the Strait of Hormuz, and that depends on what the US Navy does and on the "Iranian drone/missile attack" variable.  Until we have a clearer picture of those things, expect volatility in the oil market.  And don't forget China and India, because they have economic interests in Gulf oil, too, and either of them--or both--could make moves that further complicate things.

So if oil is no longer cheap, what commodity is cheap right now?

Steel.  It's been cheap for a year and a half, cheaper than it was during the previous years back to 2017. 

 

 

It looks to have bottomed out, so risk should be minimal.  I bought a steel stock last week and another one today.  It might be a long time before steel makes a move, but you never know--as we just saw with oil--and as long as risk is at a minimum, I can afford to wait.