Tony Greer founded TG Macro in August of 2016 to create an independent research firm where he could combine 25 years in trading and 15 years of writing a daily newsletter into one analytical platform.
Tony provides fundamental, technical, and behavioral analysis of global markets to a group of institutional clients and a personal subscriber base. Tony is also the Editor of the Morning Navigator.
Euronews’ Damon Embling spoke to Tony Greer in the latest edition of Trading UP about the latest news on the energy market.
Read full interview here
So Tony, what’s happening with the energy market?
Damon, today’s energy market is being driven by our political will to end our dependency on fossil fuels, to transition to carbon neutral, possibly at a rate faster than our economy can handle.
The way politicians in the US and the EU have been doing that is they have been cancelling pipelines, they have been cancelling drilling on federal lands and they have been discouraging investment in the space. That creates a really volatile market and highly tradeable market.
The chart you’re looking at right now illustrates the backwardated condition of the oil market where the spot price is at a much more expensive price than the rest of the calendar. The reason that occurs is because merchants are scrambling to secure their immediate supply in a scenario where there are low inventories and this scenario, broadly speaking, is highly tradeable.
So, as an individual then, how can you trade this market?
Well, with that first chart, is our fundamental backdrop. I’ve been buying oil and oil exchange-traded funds as they dip into moving average support, somewhere between the 50, 100 and 200-day moving averages and trying to sell oil on rallies, when it gets away from moving averages into new highs.
The second chart that you’re looking at illustrates the current opportunity in the market, where energy equities in white have been outperforming oil, the commodity, in red. So, we’re in a scenario right now because Joe Biden is spilling the strategic petroleum reserve into the markets and weighing down the price of gasoline heading into Mid-Terms and the oil equities don’t seem to want to go along with that dip.
And what’s your take on the longer-term outlook?
Longer term Damon, as long as the political will to end our dependency on fossil fuels is visible and present as it is today, I’m going to maintain a really positive outlook on the oil price and the energy markets and the risks to my trade right now is probably a change in leadership with a more sensible energy policy or a dramatic turnaround from this extreme speed pivot to carbon neutral.