00:00Crude. Let's talk crude oil here. Boy, a lot of volatility because of the Middle East situation.
00:07So here you are, Blue. Help me out. Crude. Bottoms. It's 64.40 on November 11th.
00:14Trades over $78 on October 8th. Could you please tell me where the CPI reading is? What crude?
00:24Where is it trading? What date? To me, that seems to be a big mystery. Do you have that information?
00:29I got all of it. No, the oil market is trading two different views of the future,
00:37two scenarios. One scenario is China is still weak. They did all that stimulus. None of that's
00:43going to work to help the economy. It did help the equity market, but that's done too.
00:50So one scenario is the oil price drifts down because demand is weak and supply is coming back
00:56on. And the other scenario is the Middle East conflict expands rather dramatically,
01:03and oil supplies are hit. And now we're talking $100 plus oil. If you look at the options market
01:10on WTI options, you will see that there's quite a bit of open interest above $100. There's a bunch
01:18at $120, $125, and there's even a little spike way out there at $150. You only have those
01:26forecasts. Those really aren't forecasts. Let me start over. You only are worried about that if
01:30there's an expansion of the Middle East, of the conflict. And, you know, it's a low probability
01:39event, but it's been rising. So to get to your question about the volatility, the market is
01:45trading the probability weighted average of these two scenarios. And if you wake up one morning and
01:52you think Middle East is escalating, you know, oil goes up 3% or 4%. And if you wake up the next
01:58day and say, wow, nobody bombed anybody, it's down 2% or 3%. So, you know, you've got a lot of
02:05volatility day to day, but you're still in the range. You really haven't broken out because
02:11these two oil demand weakness versus Middle East are fighting each other.
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