Here’s a trade war the U.S. is winning


Tariffs and steel, tariffs and steel. All anyone wants to talk about is tariffs and steel.

It’s pretty ironic because this debate occurs at the very same time it’s becoming obvious that the United States is actually winning a trade war or two. And not just winning… more like triumphing and dethroning rivals in a way that most Americans never could have imagined even a few years ago.

We’re talking about oil and gas.

Consider that barely a week ago, a report showed U.S. oil production set a new all-time record by surpassing an old mark from 1970. Then on Monday, the International Energy Agency said Uncle Sam will dominate global markets well into the 2020s. In fact, the fruited plains stand to meet 80 percent of the planet’s demand growth over that time.

More news came out yesterday, with Cheniere Energy (LNG) describing a quasi-nirvana scenario of domestic output growth perfectly matching increased demand abroad. LNG, whose massive tankers help export shale gas, sees the boom potentially driving $200 billion of domestic infrastructure investment. And who’s the big buyer of all this energy? Yep, the ol’ nemesis China.

Saudi Arabia may also delay selling shares in its massive oil company Saudi Aramco. The reasons aren’t clear, but it’s just one more example of how the easy days of OPEC getting its way on everything seem to be on the wane. There’s a new sheriff in town.

Some other stories suggest it could remain difficult for the cartel going forward because inventories of black gold continue to rise. And, in a little-noticed footnote to last month’s budget deal in Congress, the U.S. will liquidate 100 million barrels of crude from its strategic oil reserve.

This less-than-bullish story could also be playing out on the charts because TradeStation shows Nymex’s crude oil futures (@CL) crumbling below their 50-day moving average for the first time since last summer. The potential reversal comes after the commodity hit resistance around 66, an old pivot low from almost three years ago. See below:

Crude Oil
Crude Oil

Interestingly, natural gas (NG) has traded almost the opposite of late:

Natural Gas
Natural Gas
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David Russell is VP of Market Intelligence at TradeStation Group. Drawing on nearly two decades of experience as a financial journalist and analyst, his background includes equities, emerging markets, fixed-income and derivatives. He previously worked at Bloomberg News, CNBC and E*TRADE Financial. Russell systematically reviews countless global financial headlines and indicators in search of broad tradable trends that present opportunities repeatedly over time. Customers can expect him to keep them appraised of sector leadership, relative strength and the big stories – especially those overlooked by other commentators. He’s also a big fan of generating leverage with options to limit capital at risk.