Oil Prices Climb Again but Oil Stocks Slip — What's Driving the Split?

Could the oil market be picking up the scent of a TACO?

West Texas Intermediate crude touched $100 on the day for the first time since May, and it was still $3.44 higher at $99.49 — yet oil stocks were not cheering. The strength extends along the curve as well: January crude was also up $2. Despite that, the XLE oil company ETF was down 1.1% in a reversal from the open.

That could simply be routine profit-taking, although the candle is a prominent one on a chart that has moved one way for a while. Exxon and Chevron were both lower on the day, matching the XLE's slide.

One possible reading is that $100 oil is Trump's red line and that he sees the political winds shifting on the midterms. Yesterday he threw something of a Hail Mary, promising $5,000 checks to Americans, but he had also made that promise on tariffs and DOGE and failed to follow through. He also said the Iran war would not be over until after the midterms.

That is hardly a winning message, and it becomes worse as oil prices ratchet higher. In the oil complex, it isn't just crude: refined-product markets are starting to crack, and that is what hits consumers. Gasoline — and diesel especially — is moving well ahead of crude, while refineries cannot keep pace. Gas Buddy noted today that diesel was selling for $9.99 per gallon at 5 California fuel stations, a genuine shortage sign.

The easiest way out for Trump is to pull back from Iran. Maybe he feels he can topple the regime and secure his legacy; the flip side is losing the Senate and two years of endless Democrat-controlled hearings for his cabinet and administration — think Benghazi. For his aides, that is a nightmare and a big PR problem, and they will surely pressure him to end the Iran war, even on bad terms.

All told, the exact reason for the XLE's move is unclear, but a 9-day streak of oil gains is extremely rare and points to real supply problems, so something will need to change.