Crude oil prices fell almost 30% in the last month, from levels above $109 per barrel on May 19 to just $76.50 on June 19, the lowest cost for a barrel of crude since March 4, in the first week of the war in Iran.
All this happened in the wake of President Trump signing a Memorandum of Understanding with Iran, effectively reopening the Strait of Hormuz. The Navy blockade on Iran’s ports was briefly lifted, but the sailing may not be smooth, since Iran announced over the weekend that the Strait of Hormuz is closed once again, due to Israel’s strikes in Lebanon, as Iran is trying to exert leverage to put pressure on Israel.
The U.S. Navy blockade is now focusing on Iranian oil shipments, but this situation is often in flux, and there is a debate about how quickly crude oil shipments can replenish the steep drop in oil stockpiles.
Bloomberg said the Trump administration is planning to authorize the release of 172 million barrels of crude oil from the Strategic Petroleum Reserve (SPR), which will leave it with only 243 million barrels, just a third of its capacity, but an Energy Department spokesman said it will refill this decline in SPR levels with approximately 200 million barrels in the next year. Last Wednesday, the Energy Information Agency (EIA) announced crude oil inventories declined 8.3 million barrels in the latest week, larger than the 7.2 million drawdown in the previous week, since we are in the midst of peak summertime demand.
Here are the most important developments recently and what they mean:
- The big news this week is expected to be Micron Technology’s (MU) earnings announcement on Wednesday, which will be the grand finale to a stunning earnings announcement season. The analyst community is forecasting 276.5% sales growth of $35.02 billion and 949.8% earnings growth of $20.05 per share. In the past month, the analyst community has revised its consensus earnings estimate up 4.8%, which is a good sign, since typically positive analyst earnings revisions precede future earnings surprises.
- The memory stocks exhibited relative strength on Monday during a late NASDAQ sell-off, but lost their mojo on Tuesday due to weak overnight trading in Asia and Europe. As a result, there is a great near-term buying window for many of the high-flying memory and other technology stocks I recommend. The last correction in AI-related stocks this month only lasted four trading days, so every dip should be viewed as a buying opportunity, especially now that Micron Technology will be announcing record sales and earnings on Wednesday.
- I am always on the lookout for new technology and am attending a big UAP conference in Washington, D.C., on Thursday with the objective of learning which defense contractors may be striving to duplicate UAP technology for aerospace, energy, and telecommunications. At this time, Carpenter Technologies (CRS), Elbit Systems (ESLT), and Howmet Aerospace (HWM) are my primary defense contractors.
- The UFO enthusiasts have identified a new spy plane with canards (front wings) that apparently emits no exhaust or contrails, plus is eerily silent. Whether this is the new F-47 or an advanced spy plane, the defense industry is clearly developing some fascinating technology, and whether or not it utilizes so-called Unidentified Anomalous Phenomena or UAP technology is an interesting question. So, I hope to be among the first to find the companies developing new and exciting technology, even if it is not from this world.
- This is a good time to remind investors that the U.S. remains an economic oasis and is the primary driver of worldwide economic growth. As an example, in May, U.S. retail sales surged 0.9%, while China’s retail sales declined 0.6%. China remains haunted by deflationary forces, and due to the fact that the U.S. dollar is now the strongest it has been in a year, everything we import should be getting cheaper due to weak foreign currencies. I fully expect that U.S. GDP growth will accelerate to over a 5% annual pace in the third quarter due to robust productivity gains, record energy exports, and resurging consumer spending. The good news is that the AI-led productivity gains are not inflationary.
In summary, the U.S is now an economic oasis for the entire world. The U.S. is leading the world, the AI and data center boom cannot be stopped, and the boom will persist for at least the next three years.
