Tom Kloza writes a monthly column examining how global energy trends affect New Jersey consumers.
In 1974, I was a student and fraternity brother at St. Francis College in Pennsylvania. One of our frat’s unlikelier duties: driving to the Altoona airport to retrieve blues legend Muddy Waters, who was scheduled to perform at our school. His best-known song at the time was “Got My Mojo Working” — “mojo” essentially meaning good luck, or one’s immeasurable life force and charm. Younger readers likely associate the word with Mike Myers, as the second “Austin Powers” movie centers around the hero losing and regaining his “mojo.”
What does mojo have to do with global crude oil prices, you ask? Well, mojo just may be the perfect construct that explains the relatively cheap prices currently witnessed for crude oil, gasoline, diesel and heating oil.
In other words, as 2025 winds down, oil prices have clearly lost their mojo.
A myriad of fundamentals impact the supply, demand and pricing for oil, but the most salient fundamental is always the tide of money — much of it from financial entities — that often fuels oil price rallies across the globe.
Why should you care about this? Well, if energy futures’ contracts are no longer the destination for investment and speculative money, we may be on the threshold of cheaper months and years for consumers. More money in your pockets means more mojo, obviously.
On the other hand, crude oil’s loss of mojo could haunt consumers who believe that energy is one of the safest places to park savings.
The oil-and-money history in this century tells the story. In the early 2000s, oil futures contracts became a popular financial asset class akin to gold, silver, corn, and pork, which trades under the moniker of “lean hogs” (yes, I realize a popular marinade for Cuban pork is also called mojo. Moving on!)
In the past, hedge funds and commodity trading entities aggressively bought crude oil futures on the premise that U.S. and world prices might move parabolically at any given moment.
In some cases, those investors and speculators were handsomely rewarded. U.S. crude oil prices rallied to more than $147 per barrel in early 2008 (so much mojo) before cascading lower with the Great Recession. The Arab Spring years of 2011 to 2014 regularly saw triple digit crude oil numbers as well. Oil prices were catalyzed by financial money flows from the largest hedge funds as well as money inflows from large speculators.
Money flow is tracked by the Commodity Futures Trading Commission (CFTC) which parses out buyers and sellers among the financial “whales.” The tendency for “hot money” to be routed in oil was intense — there were periods when funds piled into purchases by ratios of 25-to-one or more above sales. The popularity of investing passive or active money in oil likely added $20 to $25 per barrel or more to the world price for crude.
Those high prices combined with 21st Century technology to fund the oil shale boom to create one of the greatest U.S. financial success stories of all time — the pinnacle of mojo. But the bullish “herd” has clearly been thinned in the last two years.
As recently as 2018, buyers plowed $40 billion more money into futures’ and options’ purchases than into sales. Commercial players like oil production companies were beneficiaries of that strategy, which funded substantial profits for oil producers.
But more recently, financial buyers and other speculative entities have cooled their heels. There is still more hot money bet on higher West Texas Intermediate (WTI) crude prices (the U.S. benchmark) than is earmarked toward lower outcomes, but the difference is now down to less than $2 billion. Accordingly, the price of WTI has moved about 4.25% lower so far in 2025 with widespread worries about an upcoming 2026 glut. Mojo on down.
Where did the money go?
Newsflash: Most on-camera TV analysts who track or forecast oil prices have a difficult time with objectivity. You won’t hear many think tanks or individuals predict sharply lower prices for the various hydrocarbons.
One clear example: Financial pundits continue to recommend the XLE, an energy-centric exchange-traded fund that invests money in 22 publicly traded companies in oil and gas, with valuations ranging from Apache’s $8.7 billion to ExxonMobil at about $500 billion.
Don’t get me wrong. These are good companies with strong balance sheets and decent dividends. But the “go-go days” of previous decades have passed so that investors and speculators find much more exciting alternatives for their “hot money.”
That money flow has largely moved on or at least paused. As 2025 winds to a close there is now about $3.5 trillion parked in Crypto. And as of Veteran’s Day, the “Magnificent 7” stocks in the tech-heavy NASDAQ had a combined market cap of around $21.5 trillion. The siren song from companies in oil and gas is largely silent with about $25 trillion in investments across these other higher profile assets.
In February of 2024, I compared the market value of NVIDIA with the multiple energy companies in the XLE, and exchange traded fund that invests in the largest public oil and gas companies. At the time, the XLE firms accounted for a market cap of $1.574 trillion. NVIDIA had a value of $1.782 trillion. Many analysts implied that energy was a much safer bet than overhyped tech.
Fast forward to mid-November 2025. The 22 oil and gas companies in the XLE have held their own, appreciating by a little over $15.5 billion or almost 1%. But NVIDIA’s value has soared by a tidy $2.898-trillion or nearly 163% — computer chips enjoying their big mojo moment, especially with the proliferation of generative AI (ChatGPT et al). Other huge tech firms have also performed admirably despite widespread concerns about valuation metrics. Investors who chose tech rather than oil have been rewarded.
Back to that 2026 oil glut: Predictions vary but a consensus view holds that the world will have at least 2 million barrels more petroleum per day in 2026 than it needs. Headlines trumpeting violence in the Middle East fall on deaf ears in this new environment. Oil traders shrugged five months ago when the U.S. launched massive strikes on Iranian nuclear sites. But the “risk premia” lasted only hours rather than days or weeks and there was no massive financial money flow into oil futures.
Similar reticence to chase prices appears to be likely through at least the first half of 2026. But beware that there are some cases where commodities have had curtain calls.
Take gold, for example. Back in July 2008, one ounce of gold was worth about $912 or enough to purchase about 6.2 barrels of oil. Mid-November finds gold valued at about $4200/ounce, enough to buy about 72 barrels of sweet crude.
What about gas prices?
Notwithstanding the consensus view of an upcoming glut, New Jersey (and national) gasoline prices look almost identical to last year. Will prices ever dip to the levels trumpeted in recent forecasts?
I’d say yes. Tight gasoline supplies in the North Atlantic have lingered thanks to painstakingly long refinery maintenance in Europe as well as in Texas and Louisiana. The work may continue into Thanksgiving week but most of the gasoline-making equipment that has been sidelined in October and November will be restarted by December. Combine that with a predictable 5-6% slide in early winter U.S. gasoline consumption and you have a recipe for further gasoline price erosion, particularly on the U.S. East Coast.
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