Title: Haymaker Daily — Wall Street Misunderstood the Memo of Understanding
Show: Haymaker (Substack) — written post, paid
Author: David Hay / The Haymaker Team
Date: 2026-07-14
URL: https://haymaker.substack.com/p/haymaker-daily-5e9
Note: Written post — no timestamps. Verbatim body captured via logged-in session; standard Haymaker legal disclosure block omitted.

Hello, Haymakers:

The negativity toward all things energy-related hit a crescendo at the end of the second quarter. Incredibly, despite an extremely precarious ceasefire, West Texas Intermediate crude, the main U.S. oil benchmark, was trading $68 and change on June 30th (more to follow on that date below). According to the Dallas Fed, that is barely above the break-even point for producers in the prolific Permian Basin. And, as we've often noted, oil inventories have been plunging along with oil prices, a most bizarre occurrence.

Even last Friday, as the Memo of (Mis)Understanding was clearly unraveling, The Wall Street Journal published the headline and chart displayed below, oil was only around $71. As this newsletter has repeatedly pointed out, the disconnect between deeply depleted inventory levels and depressed prices was astonishing.

[WSJ headline + chart]

Over the weekend, hostilities between the U.S. and Iran flared again, causing oil prices to erupt. As of this morning, they have vaulted 17% from the start of the month, a price explosion few thought possible. Considering the gaping divide between how the two countries view the terms of the so-called peace treaty, it's perplexing Wall Street seemed to believe the worst disruption to oil supplies in history would almost instantly and painlessly resolve.

The extremely bearish positioning and sentiment created the preconditions for the resounding rally that began last week, accelerated yesterday, and has continued into today. It's not an exaggeration to say our increasingly bullish views of oil as it kept crashing was a lonely stance. Even those of a bullish persuasion seemed to believe any rally would be mild and delayed, with a few exceptions like our great friends Jesse Felder and Kevin Muir. Fortunately, our June 30th Daily nailed the bottom, as we postulated it might.

At this point, it's reasonable to expect a near-term pull-back in crude after such a straight-up move. If so, it will be another chance to position against the complacent consensus.

Energy stocks have also perked up with the leading ETF, XLE, rising 7 1/2% thus far this month. Surprisingly, though, that's less than the move in oil. Typically, the shares of oil producers move more than the price of crude.

To us, this indicates a continuing disbelief about how dire the supply shortage truly is, creating an opportunity to add to names in this sector. Oil service entities like SLB and Halliburton look to be particularly underpriced. There is no doubt that rebuilding the Middle East's energy infrastructure will be exceedingly costly and take several years to accomplish

The Haymaker Team