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Despite the IEA announcing a massive 400 million-barrel withdrawal from the strategic reserves, oil was still down 5% on Wednesday.
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Concerns over Iran blocking and mining the Strait of Hormuz remain a big issue, as 20% of the world’s oil passes through there.
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While the consumer price index report for February came in as expected at 2.4%, the figures were tallied before the parabolic move higher in energy.
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Futures are trading lower this morning, as issues in the Strait of Hormuz get murkier. Depending on how the oil situation is going, that is dictating market direction, and on Wednesday, there was no late-day rally to save the stock market, as the black gold was up 5%. All of the major indices finished lower, except the Nasdaq, which closed modestly higher at 22,716, up 0.08%. The Dow Jones Industrials took the biggest hit, closing down 0.61% at 47,417, while the S&P 500 ended trading at 6,775, down just 0.08%. The small-cap Russell 2000 finished the session at 2,542, down 0.20%. Investors should take any big moves higher to clear the board some and start building a cash pile, as the worsening geopolitical situation, in tandem with the potential for more bad news on the private credit front, could lead to a much bigger selloff.
Yields were higher across the entire curve on Wednesday, and while the inflation numbers came in as expected, all of Wall Street knows that the story next month will be dramatically different. Toss in some strength in the dollar, and all the ingredients for bond weakness were in place. The 30-year-long bond closed Wednesday’s session at 4.88%, while the benchmark 10-year note finished the day at 4.23%.
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Once again, the oil pendulum swung, and this time not in the way that consumers would like to see. As mentioned, despite the International Energy Agency (IEA) pledging to release 400 million barrels of oil, and President Trump saying that we will tap the Strategic Petroleum Reserve, oil finished the day much higher. Brent Crude closed trading at $92.17, up 4.98%, while West Texas Intermediate was last seen at $87.76, up 5.16%. Natural gas also jumped higher, ending Wednesday’s trading at $3.20, up 5.93%.
After a volatile week for precious metals, things calmed down some on Wednesday, with less panic-related volatility in trading. Many top analysts feel that gold and silver are in a consolidation phase after both had huge moves higher over the last year. JPMorgan reaffirmed that, and while there is a growing case for gold not moving any higher from current levels, they feel that case is dead wrong. Gold finished Wednesday at $5,175, down just 0.29%, while Silver was last seen at $85.62, down 2.91%.
The Cryptocurrency markets on Wednesday showed resilience and signs of a potential rebound, with Bitcoin holding near the $70,000 mark despite ongoing geopolitical tensions. While the overall tone improved, crypto traders remain very sensitive to fluctuating oil prices and potential impacts from the Iran conflict. Options traders showed increased confidence, with positions signaling bets for a move toward $80,000. At 8 AM EDT, Bitcoin traded at $70,513, while Ethereum traded at $2,064.
