Crude realpolitik: Volatility up, consensus down
Oil’s latest leg lower isn’t just a function of oversupply—it’s the market grappling with fractured alliances and fractured demand signals. While equity markets popped on whispers of a tariff rollback from Trump’s team, crude didn’t bite. Brent barely held the bounce and remains pinned by a toxic combo: OPEC+ disunity, Kazakh defiance, and the tariff seesaw disrupting macro clarity.
Forget the headlines about “compensation cuts” from OPEC+. Kazakhstan is openly flouting quotas, pumping at record levels while Saudi Arabia, once the cartel’s swing producer, is increasingly looking like it’s throwing in the towel on price targeting. Add the 42.8% front-month volatility print—just shy of a 30-month high—and it’s clear the market’s running without a rudder.
From a positioning angle, the recent washout is telling. We’re not looking at massive new shorts—just longs getting chopped. Net selling across Brent and WTI was driven more by exit than aggression. Which sets the stage for a potential short-covering bounce if any credible signal—geopolitical or inventory-driven—tips the scales.
My bias? Still leaning short into illiquid spikes unless supply risk reasserts. But keep an eye on the May 5 OPEC+ meeting. If the group does pivot to accelerate supply unwinds, we might get a clean re-entry window for the next fade. Until then, crude trades like a hopium-stocked casino—great for day trades, brutal if you overstay.
Author
Stephen Innes
SPI Asset Management
With more than 25 years of experience, Stephen has a deep-seated knowledge of G10 and Asian currency markets as well as precious metal and oil markets.
