Did many people choose to short oil when the new administration took office, given their “drill, baby drill” stance, and do traders expect the price of oil per barrel to decrease significantly?

When a new administration announces policies that could impact the supply of oil, traders closely analyze potential market shifts. The phrase “drill, baby drill” suggests an increase in domestic oil production, potentially leading traders to anticipate a rise in supply. An expected increase in supply without a proportional increase in demand could pressure oil prices to fall, prompting some traders to consider shorting oil.

Shorting is a strategy used by traders who believe the price of a security will decrease. In a scenario where traders anticipate the oil barrel price could decline significantly under new government policies, they might engage in short selling.

However, several factors, such as global demand dynamics, geopolitical tensions in oil-producing regions, and OPEC+ decisions, can influence oil prices alongside government policies. Traders not only consider domestic policy changes but evaluate these global influences to form a comprehensive view. Consequently, while some traders might position for a price drop, others might believe geopolitical or economic factors will outweigh the effects of increased domestic production, leading to varied trading strategies in the market.