Investors Got Caught In The Sub $50 Oil Hype, Here Are Three Major Factors Oil Is Going Up, Not Down

Dissecting the Oil Market: Why Sub-$50 Oil Predictions Were “Ludicrous”

Key Concepts:

• Bull Flag: A short-term bullish chart pattern indicating potential upward price movement.
• Inside Bar Pattern: A candlestick pattern where the current candle is completely contained within the previous candle, often signaling continuation of the existing trend.
• Geopolitical Risk: The impact of political events on oil supply and pricing.
• Supply-Side vs. Demand-Side Factors: Understanding whether price changes are driven by production/supply or consumption/demand.
• Technical Analysis: Analyzing price charts and patterns to predict future price movements.
• Infrastructure Constraints: Limitations in existing oil extraction, refining, and transportation capabilities.

I. Current Oil Market Status & Technical Analysis

As of the video’s recording, oil prices were up 1.25% on the day. Gareth Soloway emphasizes a key pattern formation: a potential breakout above $58 per barrel. This breakout, confirmed by a subsequent candle, would signal a bullish trend based on technical analysis. He highlights a short-term bullish pattern – a “bull flag” (inside bar pattern) – further supporting a positive outlook. However, he cautions that a breakout hasn’t yet occurred, requiring a close above the current trend line and a confirming candle. He reiterates a previous video’s bullish chart setup, emphasizing the importance of chart analysis as an unbiased indicator.

II. Debunking the Sub-$50 Oil Narrative

The core of the video addresses the widespread predictions of oil falling below $50 per barrel following events in Venezuela. Soloway argues this hype lacked grounding in reality, presenting three key factors:

1. Venezuela’s Decaying Infrastructure: The oil infrastructure in Venezuela is largely outdated, dating back to the 1970s and significantly deteriorated. Upgrading it to increase production beyond current levels will take years, rendering immediate large-scale supply increases unrealistic. He stresses that price is based on current conditions, not long-term potential.
2. Regime Change Complexity & Chinese Interests: While a change in leadership in Venezuela occurred, regime change is inherently complex. The current vice president is showing willingness to cooperate with the US, but potential obstacles remain, including possible terrorist activities targeting infrastructure. Critically, China, a major consumer of Venezuelan oil, is unlikely to accept losing access to cheap oil and will likely actively work to counter US influence.
3. Oil Company Control & Profit Motives: President Trump’s stated intention to involve major oil companies (Chevron, Exxon, Kico, Phillips, SlumberJet) in the infrastructure buildout is, according to Soloway, the most significant factor. These companies are for-profit entities and will not intentionally flood the market with oil to drive prices down to $30-$40 per barrel. Their investment – potentially hundreds of billions of dollars – necessitates maintaining prices at $50 or higher to ensure profitability.

III. Historical Parallel: The De Beers Diamond Model

Soloway draws a parallel to De Beers’ control of the diamond market. Diamonds are not inherently rare, but De Beers artificially maintained high prices by controlling supply – buying mines and limiting the amount of diamonds released to the market, coupled with strategic marketing (“diamonds are forever”). This illustrates how a controlled supply, even of a plentiful resource like oil, can sustain high prices.

IV. Potential Future Scenarios & Price Targets

While dismissing the immediate threat of sub-$50 oil, Soloway acknowledges that a global recession could drive prices down to $25 per barrel due to decreased demand. However, he believes supply-side factors are more controllable. He posits that, if the $55 downside level holds, oil could experience a “sizable breakout” with a potential 50% upside, reaching $75+ per barrel by 2026. He identifies oil as a potential “commodity play of 2026,” potentially being the best-performing commodity in the first half of the year.

V. The Importance of Logic, Discipline, and Chart Analysis

Soloway repeatedly emphasizes the need to filter out emotional reactions and “nonsense” on social and mainstream media. He advocates for a logical, disciplined approach based on chart analysis, which provides unbiased information. He states, “Emotion makes us skip steps of logic.” He stresses that “the chart is the chart,” providing a grounded, objective perspective.

Notable Quotes:

• “If you want to be a pro investor, you have to be able to look beyond the nonsense on social media to understand what’s really going on.” – Gareth Soloway
• “Do you really think if Chevron, Exxon, Kico, Phillips, I mean SlumberJet, all of these companies are going in, do you really think they're going to want to pump so much oil that oil prices collapse to $40 to $30? No way.” – Gareth Soloway
• “Logic and discipline. That's why I use the charts because the charts have no bias.” – Gareth Soloway

Conclusion:

Soloway’s analysis presents a compelling case against the immediate expectation of significantly lower oil prices. He argues that infrastructure limitations, geopolitical complexities, and the profit motives of major oil companies will likely prevent a rapid increase in supply, supporting prices at $50 or higher. He advocates for a data-driven, logical approach to investing, prioritizing chart analysis over emotional reactions to news events. He positions oil as a potentially strong investment opportunity in 2026, contingent on maintaining key support levels and avoiding a global recession.