USL

A retest of the March low in the .67 area (pink band below) is likely as recession and an equity bear market continue into 2021.There is no more monetary cavalry to rescue zombie borrowers and highly levered asset holders.Lower asset prices are essential in restoring attractive investment opportunities.

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COVID cases on the rise in developed countries are causing the market to turn sour on oil demand recovery hopes.US has seen COVID case counts steadily rise since early September, but implied US oil demand has reached the highest level since COVID started last week.This will be different in Europe, however, as France is likely to announce mandatory stay home orders, while the likes of Germany announces a soft lockdown.While the West struggles with COVID, the East (namely China and India) is seeing a big surge in oil demand. China, especially, has already seen its demand rise y-o-y, while India is following closely.Finally, sentiment will remain poor as the Western countries discuss renewed lockdowns. But global inventory trends remain on track with the largest onshore storage draw observed in October so far. Satellite data suggests the decrease to be around ~158 million bbls.

Stocks tumbled in the U.S. and Europe as rising coronavirus infections and tougher lockdowns added to worries about the economic hit from the pandemic.

Traders convinced a revival of U.S. price growth is at hand can now double down with a bet that will profit not only from rising inflation, but also from expectations for more.

As the global economy continues to recover, oil demand is roaring back, leading to a possible rebalancing of the supply/demand situation by the end of 2021.With conventional oil on a production plateau for 15 years and probably headed for production decline, shale is the only hope of a major global production capacity boost.The economics of shale is far from ideal to fulfil the role of fueling a global economic recovery as it did after the 2008 economic crisis.The only way to make sure that shale will repeat its savior role as it did last decade would be to target funds to the industry, in other words, direct or indirect subsidies.

EIA Petroleum Inventories: Crude +4.3M barrels vs. +1.2M consensus, -1.0M last week.EIA Gasoline -0.9M barrels vs. -1.0M consensus, +1.9M last week.EIA Distillates -4.5M barrels vs. -2.1M consensus -3.8M last week.Futures ([[CL1:COM]]

During one of the most volatile years for U.S. stocks in decades, the least-loved strategy in the $1 trillion world of smart-beta is one aiming to protect investors from the turmoil.