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Today’s drop in oil prices looks to me to be a classic buy on the rumor sell on the fact trade.

U.S. benchmark West Texas Intermediate dropped 2.81% today to $72.85. International benchmark Brent crude fell 2.68% to $82.72 a barrel.

Yesterday oil moved up as Michael was rapidly upgraded from a tropical storm to an extremely dangerous Category 4 hurricane set to slam into Florida’s Panhandle on Wednesday.

Oil companies rushed to evacuate workers and shut down supply with an estimated 40% of Gulf of Mexico oil production shut down by the storm.

Today, though, as the storm actually hit land, the shutdowns had peaked, the storm was no longer growing in intensity, and the stories projecting future dangers had shifted from off-shore oil platforms and storm surge in coastal communities to torrential rains heading inland and the possibility that this storm would dump yet more rain on towns in North and South Carolina still reeling from the effects of Hurricane Florence.

In other words the reduction in oil production in the Gulf of Mexico was an old story and it was time to move onto some other worry/hope in the oil market. Like the possibility that higher oil prices and a rising dollar would cut demand for oil from developing economies.

Norway’s Equinor (EQNR), my benchmark stock for the price movements resulting from changes in the price of Brent crude, was down 2.66% on the day. Pioneer Natural Resources (PXD), my benchmark stock for U.S. crude, was down 4.59%. The Energy Select Sector SPDR ETF (XLE) was lower by 3.51%. Equinor is a member of my 12-18 month Jubak Picks Portfolio. Pioneer Natural Resources is a member of my long-term 50 Stocks Portfolio. I hold call options on both Equinor and Pioneer in my Volatility Portfolio on my and sites.