I spent two years trading Oil on a prop desk, including some of the most volatile periods in recent history.
I vividly remember the day Soleimani was killed, Oil spiked 5% intraday, only to give back all the gains the very next day. What followed was a cascade: Russia and Saudi Arabia refusing to cut production, and then the onset of COVID-19, which drove Oil below zero.
This week, the pattern felt eerily familiar. Once again, retail traders rushed to “buy the dip” based on geopolitical headlines. This time the bluff about Iran threatening to close the Strait of Hormuz. Predictably, the rally was short-lived.
Many are still looking at the wrong signals. The short setup was inevitable, if you timed it right.
Let’s not forget: the U.S. holds strategic reserves and is no longer dependent on Middle East oil. That alone changes the playbook.
PS: The second picture was few weeks after the events, back in January 2020.