WTI crude has fallen in almost a straight line since June 8, from $91.30 to $68.68 today, a 25% decline that began well before this week and has nothing to do with the Hormuz toll dispute this morning's Geopolitical piece flagged as the risk to watch. The two stories are related but not the same one, and conflating them is the mistake an advisor could make in a client call today.
The Shipping Data Already Caught Up. The Price Kept Falling Anyway
This morning's Geopolitical piece put physical shipping through the Strait of Hormuz at roughly half of pre-war volume, with an unresolved toll dispute as the mechanism that could reopen the price-shipping gap when the current memorandum expires in mid-August. Today's data shows the recovery further along than that. Saudi Arabia's crude exports have climbed to about 90% of pre-war levels, and the UAE has restored its exports to pre-war levels entirely, according to Trading Economics reporting on tanker movements through the strait. Vessels that were making unexplained U-turns and detours over the weekend returned to normal routing by Sunday.
That should be reassuring, and mostly it is. It is not, however, what moved Canadian energy stocks today. OPEC+ approved another output increase over the weekend, with seven countries led by Saudi Arabia and Russia raising collective quotas by 188,000 barrels a day, layered on top of supply that is already returning through a normalizing strait. That combination, more oil from a reopening chokepoint plus more oil from OPEC+'s own decision, is what pushed WTI toward its lowest level since late February.
WTI has given up nearly a quarter of its value in seventeen trading sessions, a slide that started well before this week's OPEC+ decision and shows no sign of the toll dispute reversing it.
WTI has fallen in nearly a straight line since the June 8 high, a decline that predates and continues past this week's OPEC+ output increase. Source: Investing.com.
The distinction matters for the client conversation. This morning's script, built around the August toll dispute, is still the correct tail risk to hold in reserve for energy-exposed clients. It is not the reason the sector is down today. Today's reason is a base-case supply story: more oil arriving from more directions at once than the market expected. An advisor repeating the toll-dispute framing to explain today's move would be citing the right risk for the wrong day.
The Currency That Would Not Move Just Moved a Little
USD/CAD has held an unusually tight band, 1.4184 to 1.4233, through the entire seventeen-session slide in WTI. That stability is itself notable. A 25% decline in oil over four weeks, with almost no corresponding move in the Canadian dollar, is the decorrelation this week's Economy and Behavioural pieces have each circled from a different angle. Today, for the first time since the June nonfarm payrolls miss began pulling the US dollar broadly weaker, USD/CAD ticked up to 1.4223, a small but real move against the pattern that has held for two weeks.
USD/CAD has traded in a 49-point band for twelve straight sessions even as oil moved sharply, and today's tick higher is the first break from that pattern since the pattern began.
USD/CAD has held a tight 1.4184 to 1.4233 band through WTI's entire slide from $91 to $68. Source: MTFX.
One day is not a trend, and gold's own pullback today, from Friday's $4,182 to roughly $4,155, points to the same conclusion from a different angle: the market that piled into the disinflation trade after Friday's jobs report is giving a little of it back, not reversing it. The timing is worth flagging heading into Wednesday's FOMC minutes and the Bank of Canada's July 15 decision. If CAD's rangebound behaviour starts tracking energy weakness more closely instead of standing apart from it, the domestic-call framing this morning's Economy piece used for the BoC becomes harder to defend, because a currency moving with oil again is one the Bank has to weigh differently than one that has decoupled from it. Tomorrow's open is the first real test of which reading holds.