peanuts
market vibes
May 28…)
“So in our pride we ordered for breakfast an omelet, toast and coffee and what has just arrived is a tomato salad with onions, a dish of pickles, a big slice of watermelon and two bottles of cream soda.” Steinbeck, East of Eden
FOMC minutes at 2 PM. NVidia reports after the bell, usually around 4:20 EDT.
In the news
The JMMC meets today at 9:30 EDT via Zoom to review plans to lift production; nothing decisive is expected.
It’s a complicated cartel now. The full 22-nation OPEC+ alliance has been displaced in importance over the past two years by a new OPEC 8 that will meet on May 31 to formalize an expected increase of 411,000 bpd for July. Reuters reports KSA may drop OSPs to a 6-month low on June 1.
If they continue at this rate, the “OPEC 8” will meet their goal to restore bpd by 2.2 million barrels by October. That’s a lot of new oil in my opinion (2.2 million bpd × 30 = 66 million barrels per month + an estimated cumulative 188 million new barrels between now and October, totaling ca. 400 million barrels or 4 days of global demand by Jan 1, 2026). For perspective, total commercial crude oil in storage in America stands at 443 million barrels today. By my thumb, OPEC+ plans to double it in 6 months. Lower oil prices have made Saudi Arabia’s stock market the worst performer globally this month, with the Tadawul All Share Index slumping 6.4% in May.
China’s gasoline demand is projected to decline ca. 3.5% per year for the next 5 years, according to a BBG article quoting a consulting company. EV sales are projected to rise 55–60% in FY 2025/2026.
Putin’s aide says Trump is “not sufficiently well informed” on Ukrainian attacks on Russia.
In the markets
Platinum open interest is up 16k lots in 8 sessions.
In longer time frames, the setup could be explosive. OI is near an all-time high. Nine years of range compression and stale risk complacency plus rising volume could ignite a scramble for liquidity in a notoriously thin market. The narrative is really just one word: China. Gold is up 6× vs. XPT since the bottom in 2008. Anglo is going to spin off its XPT biz (AMPLATS) next week.
S&P (next chart) is unchanged to a bit higher in anticipation of a favorable, albeit decelerating, NVIDIA earnings report this afternoon. Open interest remains unchanged.
Whenever a market is moving directionally and open interest is unchanged, one side is not participating; obviously, in this case, the longs. If any longs do take profits, a precise number of new longs has replaced them, practically to a point of arithmetic perfection for 4 weeks as prices rallied ca. 450 handles. AI is a very close second to magic.
Oil is up half a buck, products are up a few bps. The DOE reports inventories for petroleum and nat gas tomorrow. Open interest is rising at a good clip. I think its hedging as these adjustments unfold. Although there’s been a lot of talk about increasing production, there hasn’t been any data to confirm supplies are higher, yet.
Gasoline inventories are right where they should be for June.
In other markets, gold, silver, and copper are motionless with no recent narratives or technical development.Bonds and FX are unchanged from the afternoon NY post-close. Five-year auction today. (I’d post more charts but there really no development yet).
my vibe
These days, the markets just wander in and out of time like strangers. I go from oil to gold to stocks and back and forth looking for something to trade, but there’s rarely anything outstanding. April was a fabulous month, but we don’t get them often.
I find I’m either taking too much risk, too eager to get in, or too circumspect waiting for safe entries—mostly the latter. Have I mentioned silver hasn’t moved more than a few pennies in 31 sessions? But gold was an $1800 metal for 3 years. I can’t blame AI for that.
As much as we spend most of our energy fighting inflation and complaining about it, I must say I miss it.
good luck …today…
JJ
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Charts and data CQG and Bloomberg
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"These days, the markets just wander in and out of time like strangers. I go from oil to gold to stocks and back and forth looking for something to trade, but there’s rarely anything outstanding. April was a fabulous month, but we don’t get them often."
Missing the volatility back in April too. I find it hard to say engaged and motivated when it's like this. I try to use the time to read and learn but still...
" If any longs do take profits, a precise number of new longs has replaced them, practically to a point of arithmetic perfection for 4 weeks as prices rallied ca. 450 handles. AI is a very close second to magic.". Nailed it. I am wondering how long they can manage that trick, and if the handlers even know how it's being done. It's the apparent scale that is magic. I know that a major challenge for the Medallion Fund was figuring out how to size it's holdings and manage the algorithm so it didn't create it's own negative feedback loop. They went through multiple iterations where it would go from a calm spring day to the final minutes of the Tacoma Narrows Bridge.