Oil Price News: Why Energy Is ‘Cheap for a Reason’ After Crude Hit $62

Crude’s Friday –4.24% flush capped a week where structure—not social-media headlines—did the heavy lifting. We were already leaning bearish into MPVAL/QPVAH ~$62.52, and price delivered. With the Oil/Gold ratio back near early-pandemic relative lows and the dollar bid, crude looks cheap because the cycle says it should be. Into this week, our bias remains to sell strength into MVWAP/pullback zones, while watching the IEA OMR for fresh balance inputs.

WTI Sinks 4% as Structure Drives the Selloff

These are the charts posted to subscribers in last week’s report, released Monday morning. We were looking for capitulation around that MPVAL/QPVAH SPOT $62.52s area.

WTI Daily chart 6th Oct 2025

WTI 30 min chart form 6th Oct 2025

And here is what happened.

WTI Daily chart. YVWAP

WTI 30 Min chart. MVWAP

Specs Add Shorts While Commercials Build Length

It is my belief that commercials have now exited their buying programs for 2025. Specs would do well to hold shorts and indeed increase them into pullbacks here. In the absence of C.O.T data due to the shutdown, we can imagine that this price action will force any wrong-footed specs to feel the heat on longs. Friday’s selloff was a -4.24% move. $2.59 down.

It must be noted, this selling was already underway before Trumps tariff war talk on Truth social about Chinese rare earth tariffs. The selling in equities simply magnified this move a little, matched with what was a strong dollar in the week up to this point.

Oil-Gold Ratio Signals Energy Is ‘Cheap for a Reason’

There has been much talk of the Oil to Gold ratio over the last week. Golds extreme rally has certainly forced a lot of corners of the market to rethink values. The primary cause of all of this is the general debasement seen in fiat currencies. A global pandemic where 40% more supply of US Dollars was created for stimulus-will tend to dilute the spending power. Regardless, the chart below shows the relative value of Oil to Gold. When Oil is stronger than gold, this chart goes up. When gold appreciates faster than oil, this chart goes down. Here is the public link to this chart.

WTI/GOLD relative value chart. Monthly bars.

What is disturbing is how relatively cheap oil is. In relative values, we are at the early pandemic relative price levels of oil. This is disturbing from the POV that you are investing in oil as an asset to- where you might own an ETF, some drillers as a basket etc. Well, the returns on those are getting DESTROYED. And they are about to get a hell of a lot cheaper.

For transparency- I am long XLE 0.00%↑ puts and short oil futures the last 2 weeks.

Commitment Of Traders Report

The government shutdown still has us locked out of C.O.T data. I thought in the abs cense of this data, it would be good to look at the broader behavior of Specs in oil and what I expect to be happening anyways. We can then speak about this when the data gets updated.

• Specs to continue releasing both long and short contracts. The detail of note is that shorts are coming off a higher base, i.e see pink vertical line in the chart below. The specs longs piled into the market on the commencement of the 12-day war and have been shedding longs ever since- (Blue vertical line in chart below).
• In short, I expect specs to be holding shorts through the current pullback in price- as started last week. I don’t expect to see a rise in Spec longs when the data gets updated. I do expect to see commercials building length through to the first report in October.
  

Trade Setup: Selling Strength Into MVWAP Zones

Abandon hope, all ye who enter.

I don’t see ANY macro situation whereby oil can appreciate in value here. You can keep all the Russian and Ukrainian drone and counter drone attack narratives. They are priced out now. Falling short of an all out global conflict involving Russia, China and US, oil is in terminal price decline. Brace yourselves.

WTI. Daily bar. YVWAP

Look for the pullback to spots identified in the 30min chart below. This COULD get blown out by all manners of price action with an attempt to pullback higher to MVWAP, but I suspect MVWAP will get dragged much lower before that happens.

WTI 30 mins. MVWAP.

Conclusion

Barring a true exogenous shock, bearish structure dominates and rallies are opportunities to re-establish shorts with VWAP/value context. Product-market noise (e.g., Russia’s export drop) hasn’t changed crude’s trend. Manage risk first—waiting is trading—and let the IEA OMR and inventory cadence confirm whether this is a grind-lower or an air-pocket.

Stay safe out there. Whatever happens, you have to be able to trade tomorrow. Waiting IS Trading