Title: Ramblings & Ruminations: Mid-Year 2026 Overview Show: Paulo Macro (Substack) — Paid post Guest: Paulo Macro (aka "Cloudbear"; pseudonymous macro/positioning writer) Date: 2026-JUL-08 URL: https://paulomacro.substack.com/p/ramblings-and-ruminations-mid-year Length: written post (no timestamps) Note: Written Substack post — paid, verbatim; text as published. Charts referenced as [chart] placeholders in the flow (Bloomberg / Vanda / Goldman / Simon-White / iBorrowDesk and other third-party charts are NOT captured). Sections: Jobs / Inflation / The US Dollar, Risk and Positioning / New Trade (bitcoin) / Platinum / Oil Positioning & Sentiment. Real "&" kept. ================================================================ Ramblings & Ruminations: Mid-Year 2026 Overview Jobs, Inflation, USD + Risk + Positioning, a New Trade, Platinum, and (of course) Oil PAULOMACRO · JUL 08, 2026 · PAID Markets are highly unstable and have achieved a state of criticality. This will be a longer note today summarizing my thoughts across broader macro (jobs & inflation), USD, equity positioning, metals (specifically platinum), and a trade I put on yesterday which makes me want to throw up, so I guess it must be decent (NOT FINANCIAL ADVICE!). I will address oil at the very end due to feedback from readers that my focus has become too oil-centric over the past few months. Of course, this should be expected by the readership, as I am living through historic times and seeing so many things that have never happened before in the energy market. When you step back and realize the degree to which both physical and financial positioning have swung around since the start of the year, I probably should not apologize for having focused on what drew my attention (and my money), but there is more to the world than oil, so it's time for a bit of a review and rambling thoughts first. [Section list: Jobs / Inflation / The US Dollar, Risk, and Positioning / New Trade / Platinum / Oil Positioning & Sentiment] Quick Housekeeping: I will with family in beautiful Crested Butte, Colorado next week and after (Jul 13-25). It's very out of the way, but in the event you happen to be nearby and want to grab lunch or a drink, I would be delighted to connect. Feel free to hit me by replying to this email. Jobs I have often said that NFP jobs data is a cartoon of surveys, revisions, and narratives, and while it is refreshing that Warsh has expressed interest in modernizing the data and methods the Fed uses when examining a series that is inherently a lagging indicator, it does not change the fact that A) "Task forces" will now step into the breach to purportedly address what centrally-planned discretion has missed and B) task forces take a while, so the NFP is what the Fed is still left with. So… the payrolls data came in "soft," leaving open questions of just how hawkish Warsh will prove to be in his focus on the inflation side of the mandate while the committee remains split. I have no strong view on the path the Fed will take, but I do see reasons to think the economy is rolling over after inflecting higher into Run It Hot late last year, and that the issues run deeper than just rising cost of gasoline squeezing the bottom of the "K." The current picture is still reasonably robust on jobs: [chart] Although large employers are shedding job openings: [chart] ISM Manufacturing New Orders/Inventories historically leads PMI by 4 months. Orders:Inventories is now showing signs of rolling over after peaking in May, although still suggesting expansion: [chart] Construction continues to be all about data centers: [chart] Meanwhile the real estate market remains mired in weakness (both on pricing and activity). I am growing increasingly sympathetic to the view that Boomer ageing (see here and here from 2024) and the resultant residential→nursing home shift is going to see a flood of real estate come to the market in the coming decade, though the story in the meantime remains affordability and the stickiness of higher yields at the long end of the curve: [chart] Looking ahead, NFIB small business hiring plans suggests private payroll prints will likely cycle either side of zero for the next few months, and potentially flash a notable negative print late summer. This has implications not only for how much tightening the Fed will actually follow through on, but could very well touch off the classic 4Q rally we see in the 4-year election seasonality calendar (bad data=easy liquidity): [chart] Yes, the contour of 2026 is all wrong from the classic midterm 2Q-3Q weakness some may have expected (above), but 4Q Year 2→mid Year 3 is the "sweet spot": [chart] Economic weakness in 3Q into midterms could set up for a firm flip to monetary and liquidity easing by October, so I'm still keeping an eye on seasonality in this context into September options expiry/quarter end. Inflation Inflation is even more interesting because of the cross-current of oil prices in the narrative. Core services which should in theory mostly ignore fuel costs is becoming the key issue now that everyone was over the Iran War until Tuesday: [chart] Warsh talks a tough game on price stability, but the joke is practically common knowledge regarding his preference for Dallas Fed Trimmed Mean as a core inflation metric — it simply trails CPI YoY by 6 months when big amplitudes are involved: [chart] NFIB Small Business Compensation and Pricing Plans lead wages and "Supercore" (core ex shelter) inflation by ~8 months, and the bias is higher into autumn: [chart] Supercore CPI could bounce around in the 3-4% range assuming nothing changes — Warsh wants this at 2.0%? [chart] Wage growth YoY is sticky for both job stayers and switchers: [chart] And the trajectory for Manufacturing prices paid (led 9 months) vs CPI continues to suggest a cycling higher through the summer: [chart] This is classic Stagflation which, while consensus, is a view that had relaxed earlier this year per Fund Manager Survey from BAML. Compared to the stagflationary episodes of 2022 and 2025, there is room for this view to adjust higher: [chart] The US Dollar, Risk, and Positioning For some time now, I have held the view (shared by Doubleline's Jeff Gundlach among others) that the next slowdown or inflationary recession would see the Dollar go down rather than rise as it did during the classic Risk Off periods during 1982-2020. As fiscal policy and endless deficits put monetary policy in the passenger seat, I started saying as far back as 2022 that Americans were speaking Portuguese without even knowing it (a trope which attracted many of you to follow me on Twitter years ago), which also led to one of my favorite Cloudbear musings: Inflationary recessions create monetary illusions. This is why the potential convergence of an economic slowdown and inflation pickup in the coming months is so interesting to me. Will the Fed really go after inflation into the teeth of a slowdown with midterms around the corner? Like any public institution, the Fed solves for the primary political concern right in front of it. Is inflation really the #1 concern among the median voter? Or is there a wedge between Inflation and Affordability? And if the Fed does not chase the 2Y despite the signal it is sending… [chart] …will the long end of the curve punish the Fed for not being more aggressive with rate hikes despite a slowdown that should normally precipitate a decline in bond term premia? Philospher's sidenote: Inflation has hollowed out the middle class over time, but because most Americans will never draw a direct connection back to government spending, they won't see how the government's deficit is the private sector's surplus, fanning the extreme asset inflation in public equities (and fed by the rise of the passive mechanical bid) into a skyrocketing Gini coefficient with its inequality laid bare and commensurate financial nihilism into the gambling society we have today. "Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose." —John Maynard Keynes, The Economic Consequences of the Peace, 1919 In this context, positioning, momentum, and flow have infected everything. Most of you are aware of the positioning extremes achieved in US/Korean/Taiwanese equities and more recently oil (on the bear side), but there is another asset where I think a tradable extreme is in play — the USD: Per Vanda at quarter end, DXY positioning had surged to the 92nd percentile to the most bullish since April 2022: [chart] To be fair, and while acknowledging that straight futures on DXY are generally indicative but far from a detailed picture, positioning by asset managers and the overall non-commercial category in DXY (excluding other major FX contracts) suggests we could always become more extended (chart below). However I would have thought DXY would be well above 101 with this level of positioning — the last times speculators were this long, DXY was 105-110: [chart] In other words, the market is trading at a price that is lower than past similar positioning, and therefore price is not confirming a bullish positioning consensus (the Bruce Kovner adage) — in other words, a bear market in the dollar. "What I am really looking for is a consensus the market is not confirming. I like to know that there are a lot of people who are going to be wrong." — Bruce Kovner My friend the Gnome in California sent me this interesting chart of DXY vs FX volatility. FX vol has been the one major asset vol that has not woken up until now… like equity correlation, it's torpid, and suggests whatever we do out of the current setup up or down, it has a likelihood of being a rip: [chart] I think we are about to see another Risk Off/Bonds Off/USD Off moment of stress between now and Labor Day (July-August likes to throw these out there every few years). Look at the chart below of DXY vs UST 30Y yields — in general the period between mid-2022 and the present has been defined by a "bond yields up, USD up" correlation. But notice what happened during some of the episodes of stress like spring 2023 (SVB/regional banks), March-April 2025 (Liberation Day), and 1Q26 (Iran War)… all three episodes saw the correlation between a strong USD and rising bond yields actually flip negative — bonds down, USD down: [chart] Since May, the USD rallied as speculators piled into the US equity Risk On trade, but the 30-day correlation between 30Y yields and the USD has cratered — and this is with the yen grinding through 162! Which brings us to the "Summer 2024 Yenmaggeddon" vibes I have noted on chat. The yen really needs to make up its mind here. Look at the divergence between USDJPY (green), the nominal 10Y yield (white), and the difference in real 10Y yields (yellow) as US real yields have compressed while Japan's remain sticky: [chart] And as FX vol traders will tell you, the yen and its historical correlations have broken along with volatility which remains at absurdly compressed levels: [chart] So if I'm right, what happens if the USD rolls over and takes bond yields higher in another period of stress, and the yen decides to get in on the action and touch off chaos with FX volatility as another transmission mechanism while quant factors have been all over the road? Remember quants got destroyed in the last week of June on Momentum and Beta: [chart] Despite the mania in semis and ponzis since late March, investors in US equities have been shifting defensive for over nine months as evidenced by successive peaks in equal-weight consumer discretionary vs. staples, the "broadening out" attempts narratives notwithstanding: [chart] In short, this tape is a mess, and among the most dangerous I have ever seen. Even on some of the basic positioning data, there is some disagreement. In one corner you have Scott Rubner of Citadel who never fails to remind us how retail's participation is seemingly endless and they are the new force in markets. But have you noticed how it doesn't really feel that way? Not like 2025, or 2021 anyway? I'll come back to this. But first here's Rubner last week — retail is supposedly gorging with speculation: [chart] At the same time, margin debt has peaked out and started rolling over — a signal that precedes all major bear markets this century: [chart — Simon White, Bloomberg] Schwab's Trading Activity Index (STAX) shows net buyers notched its highest level since February 2022, and well through the late 2024 speculative frenzy: [chart] Interestingly, Vanda's data on investor segmentation suggests that retail has actually been shedding exposure into strength the whole way up since late March — they actually bought the war dip in Q1, and then sold into the rally: [chart] As a sidenote: there are clear methodological differences with Vanda (whom I respect immensely, and actually rely on more for a more narrow picture of what constitutes "retail"). The easiest way to distill the difference as far as I can tell is that Schwab and Fidelity have a broad mix of "retail," from mom and pop ETF passive robo-advisor clients to self-directed degenerates. In the case of Citadel, as a large market maker for internalization pay-for-order-flow trading, I don't think they have a good handle on the breakdown of the specific profile of the flow on the other side of their trades (Schwab or Fidelity flow = retail). Vanda seems to be trying to narrow in the Robinhood degen trader segment, and in this context it makes sense that recent retail participation "feels" a little lackluster in the tape. Robinhood is acting like they need the money to pay bills or are otherwise "giving thanks" and moving on (the smart money? Is that possible??), while BofA private clients and Schwab mom & pop continues to pour money into the market. It's weird, but my sense is the rank speculation of the Robinhood meme cohort has been a soft echo of its former glory. I mean, Wendy's stock? Really? Up 50% on a measly $1bln market cap? What weak sauce… I think another part of the answer is that the overall retail picture has shifted out of cash equities into A) 0DTE options as Rubner showed above, but also B) leveraged ETF products which we are all well aware have exploded since March: [chart] With this move into levered products (and its significant volatility drag as all these broken products eventually return to their natural state, i.e. zero), the concentration into semis and broader tech has been absolutely crazy: [chart] These leveraged ETFs are creating enormous flow as they rebalance: [chart — Simon White, Bloomberg] And as discussed a month ago, equity funding markets became very tight starting in late May, in large part because of the demands on dealers to fund this leverage (as well as carry prospective IPO and secondary/unlock paper): [chart — Simon White, Bloomberg] Since quarter-end balance sheet demand, funding has finally eased, but this is not a good thing — it's the backside of the mountain. Remember the funding tightness of the late-2024 post-election "most business friendly administration in history" mania? It took a few weeks, and people will blame Liberation Day, but the kindling was on the forest floor waiting for a match as funding cost exhaled and demand for leverage disappeared into a distributive tape that was still chopping around: [chart] The real issue to watch from here is whether this recent tightness remains specific to equity funding, or if dealers' broader balance sheets now start to show signs of congestion and therefore serve as a broader contagion mechanism via wholesale deleveraging. Simon White of Bloomberg has had a good note last week and another yesterday (July 7th). We know hedge fund returns are growing more sensitive to S&P alongside their growing equity repo leverage at banks: [chart] So far, there are few signs (outside a recent hiccup with quarter end last week) that balance sheet congestion is leaking into fixed income and the basis trade, for instance: [chart] The problem would be if dealers go from charging high rates on equities to actually cutting risk around the shop. The story of June was the former, but the markets are changing their tone, and it seems to me that it's only a matter of time until higher funding rates flip to a reduced risk appetite by funding banks. The issue is reflexive: higher volatility begets haircuts and reining in leverage, which begets higher volatility, especially during less liquid summer months (it's no coincidence that crises like LTCM 1998, Global Alpha "Quant Quake" 2007, or Taper Tantrum 2013 came to a head in July-August). In this context, the compression setup in correlation vs. dispersion and single stock vs. index volatility is important. Yes, the Dispersion Bros are back, and they might want to watch their backs… here's Simon again this morning noting how single stock implied volatility is at an all-time high level vs. index vol (see the Dispersion Bro link for a primer on how this works): [chart] Rampant chasing in AI stocks through call options took single-stock vol ever higher. Downside risks are seemingly an afterthought as we barrel into 2Q earnings where expectations built to tremendous levels over the past few months (never mind the quality issue of investors putting a multiple on "Other Income" one-off gains by hyperscalers as they mark up their equity stakes in OpenAI and Anthropic) — but have started to fall… …while demand for puts remained relatively negligible until very recently, depressing put/call ratios to extremely low levels. In fact according to Goldman, S&P put/call skew just recently collapsed to 0.71 — the lowest reading on record: [chart — Goldman Sachs] The dominant performance of a handful of mainly AI names… [chart] …is also repressing correlation to near record lows: [chart] I mean, this is nuts…we are right back at Yenmaggeddon 2024 levels in correlation… better hope the BoJ doesn't "do something": [chart] And according to Simon, low pairwise correlation is not only apparent at the stock level, but also at the sector and factor levels — going back to the 2018 lows right before the Volmaggeddon rupture where short vol trades like the XIV ETF blew up, causing a massive spike higher in volatility and a peak-to-trough drawdown in the S&P of almost 12%: [chart] Recall the single stock vol vs index vol chart above. This low correlation at the index level is masking how average volatility of stocks is rising fast. Dispersion, the difference between average single-stock vol and index vol, has risen to near record highs — but has also never been so high relative to correlation. Meanwhile, the extraordinary demand for levered upside via call options has also increased the risk of a gamma squeeze, where dealers short the calls have to chase prices higher to hedge. As Simon White notes: "This has led to another unprecedented set up, whereby the correlation between the VIXEQ and the S&P has never been more positive, even as the correlation with the VIX and the index hovers near its lows. The gap between the two has never been wider. A gamma squeeze can take stocks higher in the short term, but when dealer hedging is complete, other option greeks, such as vanna and charm, can quickly take the market lower with no catalyst." [chart] Coming back to the issue of funding and leverage, dealers are sitting on a lot of overall inventory, and this has repressed bond volatility (which is the substrate collateral that institutions use for leverage)… here's Simon White again: [chart] The problem is that volatility in rates (MOVE) and realized correlation tend to move together: [chart] So what happens if bond volatility rises, as it did again today with the 30Y blowing out through 5%? Rising haircuts, collateral calls, and forced deleveraging? Rising correlation, rising index volatility, and declining dispersion? We've seen this Acapulco Cliff Dive movie before — we've just never seen it from such heights or extremes. And it's sitting at the precipice as July summer vacations have kicked off in earnest, and this seasonality matters: [chart] One last chart brings this all together…I built a private indicator to gauge Carry Unwind Risk. We are at January 2018 and 2020 levels. With the extremity in conditions laid out above, is it hard to imagine how a rallying yen could touch off an unwind in correlation, dispersion, and volatility? [chart] See the criticality now? As I say… stay frosty… New Trade I really did not want to share this. As mentioned at the top, it makes me want to throw up. But just so people can't accuse me of being 100% oil/commodities or bearish risk all the time, here goes: I started buying bitcoin upside on Monday. I know. I can't believe these words. Look — it's a trade. And as the ultimate risk on/liquidity asset, it's not going to work. Please read that twice. The beauty of an instrument like bitcoin is it's a chartist's dream. It literally has no fundamentals. It's gold for Millenials! It's a debasement trade! It's individual sovereignty! It's a store of value! It's the tip of the liquidity spear! It's a ponzi! It can be any or all of those. For me it's the ultimate flow asset. Money goes in, price goes up, and vice versa. And because of that, only the chart matters. Only. The. Chart. Matters. The last time I cared about the chart was last September when I started shorting it (read the replies, or see a summary of The Pile On here). Here's what I see now: [chart] Yes, I know Michael Saylor and Microstrategy is a disaster and will end in a bankruptcy or other restructuring. I think he will take BTC down to extreme levels with him. But he sold some Monday, and bitcoin closed…up. Tuesday the Nasdaq got smoked -1.8%, and bitcoin closed -0.2%. Why is bitcoin holding on while risk starts to fray? Again: fundamentals don't matter. I could tell you "maybe a bull market in cross-border money laundering and capital flight is starting to inflect on the back of renewed Iranian hostilities." Or maybe I'm right about the USD rolling over along with a dovish Fed backpedal on weak payrolls over the next few months, and the weaker USD lets loose renewed anti-dollar sentiment. It really doesn't matter. I just know that selling is looking exhausted, and that's enough. So how's positioning? Bitcoin futures positioning has always been weird (maybe driven by some kind of pod shop carry arbitrage in futures vs spot BTC, I don't know). Yellow line is small traders who are rarely net short, while in green you have the overall non-commercial (large trader) net long on an inverted scale. You can see large speculators have never been this net long, but unlike in most commodities, large specs in futures tend to get very long at low extremes (Sept 2023, March 2025). [chart] Let me be clear: this is a trade and sized as such. Bitcoin is still an accident waiting to happen as Saylor's "bitcoin physics" unwind will be pretty epic and a chapter in its own right. But for now — for now — I'm long. A buddy used to say "do the hard trade" and let me tell you, this trade felt really hard putting it on. Now read this more than once: I would not listen to me, and this was not — NOT — financial advice. Platinum So the more I think about the US Dollar and what things look like on the other side of Risk Off (or violent rotational summer chop), the more I start to think that we are getting closer to a significant move higher in platinum and copper. I'm probably early here — again, the tape is a mess. But platinum fundamentals have not changed, and positioning has really cleaned up (discussed in past notes, and written up in mid-January here if you need a quick review of some fundamentals and longer-term technicals I watch). Platinum has collapsed since the January precious metals bonanza: [chart] Physical markets have relaxed quite a bit in six months, and lease rates are low relative to the past year (but well above the pre-Covid steady state of zero, and toward the high end of the 2020-24 range): [chart] In the meantime, global platinum ETFs have been quietly draining of material (probably all going to China, and once it goes in, it's never coming out in pure metal form). Since late January, over 500koz has disappeared: [chart] This is important to watch, because back in 2016-18 the palladium ETFs began to draw down, and it took a while to get the message, but then suddenly in 2019 the price really woke up: [chart] Amazingly though, London platinum remains in backwardation, suggesting an underlying physical tightness, or disincentive to store/lend: [chart] On the financial/paper side, Comex open interest has collapsed to levels rarely seen over the past five years: [chart] Large speculators (orange) and managed money (yellow) have not capitulated, but small speculators (purple) are pretty close, though speculative positioning in platinum is very noisy: [chart] Of all the platinum ETFs that total 2.8mmoz, the Aberdeen PPLT vehicle is the largest at ~1.1mmoz. Interestingly, over the past two weeks the borrow rate to short PPLT has skyrocketed to nearly 12% annualized — exceeding spikes in borrow demand from late July and October last year: [chart — iBorrowDesk] To be fair, this in itself does not mean anything immediate will happen (the two prior borrow rate spikes seen above are boxed in yellow below)… [chart] …but it's interesting enough to suggest that redemptions (ounce withdrawals) have run deep enough to create a borrow issue. And of course there's the chart with an interesting little divergence in the hole: [chart] My eyes are peeled for any near-term liquidation by speculators… Oil Positioning & Sentiment I wrote this section on Monday before Iran attacked several vessels in the Oman southern passage, the US bombing response on Tuesday, and China's announcement over night that they are lifting the product export ban (extremely important!), so please keep that in mind. While I was tempted to remove it given all the commentary around the positioning washout in Brent, I think some readers still involved in the oil trade will benefit from the section farther down on analysts' recent herd behavior, so here goes. To start, I will never tire of looking at this (by the way, that's a Flush of $60 highs in cracks): [chart] My pal HFI Research put together a fun chart of the Economist which seems to bat 1.000 when it comes to calling sentiment turns (though to be fair, the "We woz wrong about oil" was not a cover: [chart] On the WTI side, the large non-commercial long (futures & options) as a percent of open interest fell to levels below the 2023-24 washouts, exceeded only by Liberation Day and 4Q25 "Superglut" going back to 2011: [chart] Meanwhile, WTI open interest itself is pretty rinsed (yellow circles denote monthly expirations — note the lack of recovery in OI following the recent July expiry)… back to December levels: [chart] It wasn't just the oil price that retraced the war… WTI implied volatility just got back to January levels: [chart] In Brent, managed money short notional (US$) is still at the highest in history, and remember that this number goes up if crude pops: [chart] As many have already seen from John Kemp at Reuters, the further drop in flat price to June 30th sent managed money net long to the 4th percentile: [chart] …while the long/short ratio fell to zero: [chart] In notional US$ terms, Brent managed money net longs are down to $4bn (blue) which is pretty much the basement seen in December, while combined WTI + Brent at $10bln has rarely been this low — I'm sorry but this is truly nuts: [chart] You know what else looks just like December 2025 along with a lot of this current positioning? The calls by every major house for a "Superglut." Here is a sample just to drive the point home (all of these were published within the last two weeks. So that you don't go blind, I have highlighted in red the relevant surplus figure in the "glut" balance. Energy Aspects is an outfit I respect a lot. They have +3.2mm in crude surplus for 2027. GS also "only" has +3.2mmbbls in 2027, with a few quarterly >4mmbpd bangers in 4Q26-2Q27. Natasha at JPM is working with +3.8mmbpd in 2027 after a similar series of >4mmbpd quarters in 4Q26-2Q27. Citi with a +4.1mmbpd 2027 build (and now calling for $60 Brent by the end of this year). Meanwhile Morgan Stanley comes off the top rope with a stunning +4.4mmbbls crude build in 2026-27. And then there's Rystad…not sure what world they live in where we had 1-2mmbpd of spare capacity before the war, but they are happy to work with 4-6mmbpd of surplus depending on the month in 2027. Hang on… Does this seem familiar? Recall in Oil Has Turned a Very Big Corner from January 28th, in the very first section called "Consensus into the New Year," I included a variety of Wall Street "Year Ahead" 2026 oil outlooks showing the Street was nearly universally bearish. In that note, I noted: Here is Deutsche from their mid-December outlook calling for oil Brent to average $55 in 2026 and lowering their 2027 outlook from $70 to $65. Their view is that OPEC+ will be forced to cut production by 1-2 mmbpd to manage the Brent price back to $65/bbl in 2H26. Here's Goldman Sachs a day later, calling for Brent to average $56/bbl and WTI to average $52 in 2026. Not to be outdone, JP Morgan's oil outlook published just before Thanksgiving called for a surplus of 2.8 and 2.7 mmbpd in 2026 and 2027, respectively, with Brent prices falling into the low $50's by 4Q26 and ending the year in the $40's, before averaging $42/bbl in 2027 and ending the year in the $30's. The consumption stimulated from such depressed prices and resultant production cutbacks would result in a $58 average Brent price for 2026. Most fascinating to me was John Kemp (former senior energy analyst at Reuters), who hosts a 5-year forward oil price survey each year. Just last week, on January 20th, he released the results of his 11th annual survey covering the oil outlook for 2026-2030. The results were particularly notable given the diversity of respondents (see the last bullet point); I reproduce the results here in their entirety, with bold/italic emphasis is mine: John Kemp's Eleventh Annual Oil Price Survey (2026-2030) — 20 January 2026 Key results: - Front-month Brent futures averaged $68 per barrel in 2025 down from $80 in 2024. Realised prices were significantly below the mean forecast at the start of the year of $76. - Prices are expected to fall further to an average of $62 in 2026. Forecasts are tightly clustered, with more than three-quarters of respondents predicting they will average between $55 and $65 in 2026. - Prices are expected to average between $60 and $75 throughout the five-year forecasting horizon, down by between $7 and $15 per year from last year's survey. - Forecasts remain tightly clustered throughout, but biased slightly towards the upside, particularly for later years, with a slight positive skew, which is more pronounced towards the end of the five-year horizon. - Forecasts have become more clustered over all time horizons, with uncertainty declining back to levels last seen before Russia's invasion of Ukraine, and in some cases several years before. Analysis - Prices are expected to remain anchored near recent levels throughout the next five years, well below the long-term inflation adjusted average since the start of the century of $93. - Uncertainty and upside price risks caused by Russia's invasion of Ukraine and the U.S./EU sanctions imposed in response have disappeared as the market has adapted. - Upside risks from sanctions and conflict in the Middle East are balanced by downside risks from sluggish economic growth and the gradual shift away from oil-based transport fuels especially in China. - Extra production from the United States, Canada, Brazil, Guyana, Argentina and possibly Venezuela as well as OPEC⁺ is expected to meet increasing consumption comfortably for the rest of the decade. Not to single out JPM, but to repeat above (citing their November 2025 note): "Surplus of 2.8 and 2.7 mmbpd in 2026 and 2027, respectively, with Brent prices falling into the low $50's by 4Q26 and ending the year in the $40's, before averaging $42/bbl in 2027 and ending the year in the $30's. The consumption stimulated from such depressed prices and resultant production cutbacks would result in a $58 average Brent price for 2026." Over one billion barrels of production gone, but now it's +3.8mmbpd instead of +2.7mmbpd (again — how exactly??), and here's the price deck… averaging $63 Brent in 2027, and ending the year at $56. Putting aside how this is even possible if before the war the actual spare capacity for Opec was 1-2mmbpd (I'm being generous here, and yes Wall Street was working with 3-5mmbbls but they really can't be helped)?? Reading Wall Street research last week, I felt like I was watching the 22 Jump Street remake sequel. I think I'll leave it there. Hope everyone is well… stay frosty… As always, kindly yours, Paulo aka Cloudbear