Oil hit $105 because Saudi Arabia canceled crude shipments after a pipeline closed. Houthi militants blew it up. This is the part where I'm supposed to explain geopolitical risk premiums.
I won't.
The Saudis had one job. Keep the oil flowing. They built a pipeline. Someone broke the pipeline. Now they can't send the oil. Retail traders saw this headline and bought USO calls like they were scratching lottery tickets at a gas station. Except lottery tickets have better odds and don't expire worthless in three days.
Here's what happened in every brokerage account yesterday: guy sees oil news, thinks he's Daniel Plainview, buys crude futures with money he needs for rent, watches his account implode when volatility spikes both directions, closes position at a loss, tweets that the market is rigged. The market isn't rigged. You're just bad at this.
The Houthis carried out renewed strikes this week. Renewed. As if the first strikes were a limited theatrical run that got extended due to popular demand. Coming this fall: Houthi Strikes 2, now playing in Saudi infrastructure. Critics are calling it "explosive."
Saudi Arabia responded by canceling some cargoes. Some. Not all. Some. Like they're hedging their bets on whether their own pipeline will work tomorrow. Imagine running a lemonade stand but you're not sure if you'll have lemons. Now imagine the lemons cost $105 per barrel and fund the entire economy. That's Saudi Arabia right now.
The technical picture is irrelevant. The fundamentals are irrelevant. The news is irrelevant. Oil will go wherever it wants regardless of pipelines or militants or your thoughtful analysis of supply disruptions. But you read this headline and thought you had an edge. You don't. You have a RobinHood account and a dream, and both are about to get crushed by theta decay while you Google what theta means.
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