Every trading community, from the smallest retail account to the largest institutional desk, confronts a universal scarcity: finite capital set against infinite market uncertainty.
Oil has this ability to grab the centre stage. A big swing in crude prices can reset inflation expectations almost overnight, unsettle central banks, and shuffle stock-market winners and losers. Think back to 2022. Crude shot up as economies reopened and supply chains buckled, feeding one of the sharpest inflation spikes in decades. The Energy sector loved it. Tech, not so much. Which makes you wonder if oil is really pulling the strings, or just playing a noisy side role?
Markets carried the rate-cut conversation forward this week, but the tone shifted from speculation to near-certainty after softer US labour figures reinforced July’s weakness. Traders are now pricing more than 60bps of Fed easing by year-end, with September looking like the earliest realistic pivot.
Earlier this year, energy stocks had some serious tailwinds behind them. Rising oil prices, stable earnings, and talks of a Fed pause helped push the sector higher. The Energy Select Sector SPDR Fund (XLE), which holds a mix of top oil and gas companies, caught a decent bid. For a while, it looked like it might keep going. But lately? That momentum has slowed. Prices are starting to fall, and a few technical signs are flashing yellow. So, is this just a mid-year pause, or are we seeing the early signs of something more? Let’s break it down.
This week felt like a tug of war between optimism and caution.
In the US, retail sales surprised to the upside and consumer sentiment held up, giving bulls something to cheer about. But June’s inflation numbers told a different story. Core CPI ticked up to 2.9% YoY, keeping the Fed firmly in wait-and-see mode.
The global economy is still sending mixed signals, and last week was no exception.
In the US, growth is clearly losing steam, but inflation is proving hard to shake. The Fed’s preferred inflation gauge, core PCE, nudged up to 2.7% in May. That’s not the kind of number that pushes the Fed toward cutting interest rates anytime soon.
For most of 2024, tech stocks dominated headlines and investor attention. But in 2025, something unexpected happened: oil stocks quietly took the lead.
The latest US data gave a bit of a mixed signal. On one hand, the economy is clearly slowing down. But on the other, inflation – or the general rise in prices — is still hanging around.
Last week’s macro backdrop showed cooling inflation but softening demand. US retail sales unexpectedly declined by 0.9% in May — the biggest drop in four months — hinting at consumers pulling back amid high rates and lingering price pressures.
