U.S. crude fell below $70 after a cargo ship was attacked near Oman. Markets saw violence in a critical shipping lane and decided this meant less demand for the thing that ships carry. Makes perfect sense if you've suffered a major head injury.
The logic works like this: attack happens in the Middle East, traders panic-sell oil, prices drop, everyone pretends they understood supply and demand the whole time. A cargo ship gets hit near one of the world's most important oil transit routes and the market's response is to dump crude like it's a penny stock pump scheme. Brilliant stuff.
Friday's session had traders "digesting a flurry of news from the region" which is financial media speak for "we have no f*cking clue what's happening but we need to file copy by 4pm." They digested it. They really chewed on it. They let it sit in their stomachs while staring at their Bloomberg terminals, wondering if today would be the day they finally understood why prices move.
Here's what actually happened: a line went down on a chart. That's it. The line was at $71, now it's at $69. Retail traders saw the headline about the attack and immediately started Googling "where is Oman" and "is this bullish for oil" and "how do I uninstall Robinhood." They sold. Then they bought. Then they sold again. Their accounts are now worth less than the shipping insurance on that cargo vessel.
The cargo ship is fine, by the way. Or it's not. Doesn't matter. The important thing is some guy in New Jersey panic-sold his USO calls at a loss because he read "attack" and "Middle East" in the same sentence and assumed this was his moment to demonstrate strategic thinking.
Oil closed the week down. Traders closed their positions. The ship limped to port or sank or turned into a submarine. And somewhere, a technical analyst looked at his charts and realized none of this would've shown up in the Bollinger Bands anyway.
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