Select Page

Some days you need to search for an explanation for a market move. Other days the explanation hits you over the head.

Today crude oil is up, in a strong but orderly move.

Two catalysts.

First, yesterday President Donald Trump announced that the U.S. would pull out of the 2015 Iran nuclear deal. It’s hard to see this doing anything but raising the odds of military action in the Middle East.

Second, U.S. crude inventories unexpectedly dropped last week, the U.S. Energy Information Administration reported. Inventories fell by 2.2 million barrels. Oil analysts were looking for an increase in inventories of 1 million barrels.

This morning, as of 11:40 a.m. New York time, U.S. benchmark West Texas Intermediate was up 2.66%, moving above $70 a barrel again to $70.90. International benchmark Brent crude climbed 2.77% to $76.92 a barrel.

The Energy Select Sector SPDR ETF (XLE) was up 2.01%. U.S. oil shale producer Pioneer Natural Resources (PXD) was up 2.18%. Brent producer Statoil (STO) was ahead 2.67%. (I hold shares and options on both these companies in my portfolios.)

In the Treasury market yields on the 10-year Treasury rose 2 basis points to 2.99% and the yield on the 2-year Treasury rose to 2.52% ahead of auction activity.