Managing Editor’s Note: As you’ll hear in today’s issue, high oil prices aren’t going anywhere anytime soon.
President Trump thinks he can save us from what’s coming. Larry isn’t so convinced… in fact, he believes if things continue the way they have, all hell could break loose, wreaking havoc on the economy.
But if you see it coming, there’s a chance to change your financial future.
Larry has developed a technique he calls “oil skimming”… and it could make a huge difference in how you come out on the other side of this.
You can go here to learn more about this strategy…
Consumers and businesses are feeling the pinch caused by high oil prices.
In the U.S., a spike in oil prices is flowing through to gasoline, where the national average has topped $4.50 per gallon. The average price per gallon has only been higher in 2022.
A recent report on consumer sentiment plunged to the lowest level in over 70 years, with survey respondents putting much of the blame on high oil prices.
Businesses are feeling the pain as well. A survey of manufacturing firms released last week showed surging input costs from the jump in oil.
And rising jet fuel prices are also squeezing airlines, which have collectively seen fuel costs double since the start of the war in the Middle East.
Given the impact of high energy prices, consumers and businesses alike are hoping for quick relief. Headlines keep teasing that a peace deal between the U.S. and Iran is within reach, and that exports of energy products through the Strait of Hormuz can resume.
But even if an agreement is struck today, it will be some time until energy production returns to normal. At the same time, oil inventories are being quickly depleted.
Here’s why the world is facing an extended period of high energy prices…and how active traders can take advantage.
Oil prices have spiked as much as 68% following the start of the war between the U.S. and Iran. And although oil has come off its peak, the price remains 62% higher on the year.
And it could be much worse if not for the release of oil stockpiles around the world. Nations across the globe have blunted a further spike in energy prices by releasing oil inventories.
One estimate from the U.S. Energy Information Administration (EIA) shows global oil inventories have plunged by a record 8.5 million barrels per day in the second quarter of 2026.
But the record drawdown of crude has inventories reaching dangerously low levels. Executives from oil producers and energy trading companies are sounding the alarm.
An executive from Exxon Mobil recently warned that oil inventories were approaching “unheard of” levels and that prices could “shoot up.”
Oil trading company Trafigura said that the world had largely run through its buffers of fuel inventories.
But even if the conflict in the Middle East suddenly ends, that doesn’t mean oil markets will immediately return to normal.
Normalizing oil markets will take time while supplies are running tight, which means high oil prices are here to stay.
Even if the Middle East conflict ends tomorrow and tankers were free to transit the Strait of Hormuz, it would take months to restore oil production and see shipping flows reach pre-war levels.
And keep in mind that scenario depends on a resolution. But the war continues, and traffic through the Strait remains at a crawl while inventories are being drawn.
That means you should expect upward pressure on oil prices for the foreseeable future. But that also means trading opportunities in oil and related producers when prices pull back to key support levels.
One energy stock I’m watching recently is Exxon Mobil (XOM). After breaking out from a multi-year base, XOM jumped by 35%.
But along with oil prices, XOM has pulled back and is recently testing a key level. Here’s the chart below…
Following the bigger breakout over the $120 level, XOM is forming a new consolidation pattern.
That pattern is seeing price support emerge at the $145 area (dashed line), where XOM’s stock price has bounced higher on three occasions.
With oil prices expected to remain elevated, you can look to trade pullbacks in oil and related producers by trading shares at key support levels.
That could be price support, as with the XOM example, or on tests of moving averages like the 50-day MA.
Buying a test of support also allows you to place your stop loss close to your entry. That way, you can skew risk and return in your favor.
Production cuts and low inventories are coming together to support high oil prices. Active traders should look to take advantage.
It is exactly these sorts of setups where my “oil skimming” strategy tends to thrive. You can go here to learn more if you’re interested.
Happy Trading,
Larry Benedict
Editor, Trading With Larry Benedict
Reading Trading With Larry Benedict will allow you to take a look into the mind of one of the market’s greatest traders. You’ll be able to recognize and take advantage of trends in the market in no time.
