Oil prices are soaring back after getting smashed on last week’s stock market correction. Of course, all the selling in stocks and oil are not about what is happening now but what may or may not happen in the future.

The economy and economic data has been too hot! That means we may see higher rates and with rising wages perhaps even inflation. The oil market is also fearing more U.S. oil production after a 26 increase in the U.S. rig count,

Yet, unlike the last surge in the U.S. shale rig count, the producers are responding to demand. They are not pumping just for the sake of pumping, U.S. oil supply has been plunging and demand globally is at new all-time highs. A hot global economy runs on oil. We expect that oil will rebound in price and retake previous highs within a couple of weeks.

We should see another 2 million barrel drop in Cushing crude supply but, overall supply should rise by 1.5 million barrels. We should see a 2 million barrel drop in distillate and a 3 million drop in gasoline. Refinery runs should drop by 1.0.

Use this weakness to establish long-term bullish position. Unless the global economy crashes, then the global supply situation is the tightest market we have had in years. Natural gas is still under pressure as production rises. Even with this last blast of winter, we can’t rally! A major warning sign for prices this spring.