A trader who predicted early last month that oil would rally believes that the move to the upside is far from over.
Pseudonymous trader NoLimit tells his 1.1 million followers on X to keep a close watch on the VanEck Oil Services ETF (OIH) and the State Street Energy Select Sector SPDR ETF (XLE).
According to the trader, both exchange-traded funds are up double digits in percentage points and will likely continue to move higher.
“On February 2nd, I told you to buy OIH and XLE. Since then:
OIH: +14%
XLE: +10%
Crude oil: 7-month highs.
And in my opinion, we’re just getting started.”
The trader notes that the US military action against Iran has created conditions that could disrupt the global oil supply.
“This weekend, the U.S. and Israel launched major strikes on Iran. Iran is retaliating across the Middle East…
About 20% of the world’s oil supply passes through the Strait of Hormuz every single day. That’s the narrow waterway between Iran and the Arabian Peninsula. Iran controls one side of it. If that strait gets disrupted, even partially, global oil supply shrinks.
Iran has already declared all American assets in the Middle East ‘legitimate targets.’ Gulf state airports are shutting down. 1,400+ flights cancelled.
Crude was already climbing before any of this happened. It went from ~$61 in early February to $67 heading into the weekend.”
In his view, the market had not fully priced in geopolitical risk.
“The geopolitical risk premium in oil was underpriced for weeks… This is exactly why I said on February 2nd this was NOT a short-term flip.”
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