Oil prices whipsaw on war fears but supply is flooding the market — long oil ref
Thesis
The Bloomberg story about Asian refiners unloading oil on the US market reveals a key insight: while Middle East geopolitical tension caused a brief price spike, the actual physical oil supply is overwhelming demand and creating a glut. When crude input costs drop but retail fuel prices stay sticky, refiners capture enormous margin spreads. The second Bloomberg article about the initial tanker-hit spike shows the market is still pricing in geopolitical risk, but the glut story confirms the fundamental reality is cheap supply. Pair this with the Reuters article about gold suffering its biggest drop since 2008 on a hawkish Fed — a strong dollar further depresses commodity prices, making oil even cheaper for refiners to buy and process.
Strategy approach
Build a rule-based strategy that enters long VLO on D1 when crude oil (CL=F) drops 5% over 5 days while VLO is making a 10-day high. Exit if oil rebounds 8% from its low or after a 21-day hold. Use a 7% trailing stop.