Things were looking dicey for crude mid-week.

I mentioned previously that the “powder keg” premium was gone in oil. For a week or two, traders turned to crude to hedge spillover risk from the Israel-Hamas conflict, but that trade looks dead.

WTI was below support Wednesday, trading beyond three-month lows. Brent fell below $80 for the first time since July.

The slide was enough to catch the attention of Bloomberg’s terminal bloggers, who made it their “question of the day.” “What is oil telling markets about the state of the economy?” Nour Al Ali wondered, from London. If you’re a terminal user, you can weigh in.

We know oil’s picking up on weakness in China. That much is clear. You don’t need to be an economist or any sort of expert on energy markets to connect these dots: Domestic demand is weak across the world’s second-largest economy, and that should weigh on imports, which is problematic because China’s the biggest crude importer on Earth. Crude imports rose last month, but only after a sharp drop in September, and the outlook into year-end isn’t rosy.

Another factor is the forecasted decline in US gasoline demand for next year. According to the EIA, Americans’ gas consumption will be the lowest on a per capita basis in two decades in 2024. The agency cited “an increase in remote work” in the US as well as “improvements in the fuel efficiency of the US vehicle fleet.” Notably, the EIA also mentioned “high prices and persistently high inflation” in explaining lower demand. I guess there’s something to that old adage about the “cure” for high prices being high prices.

That latter point underscores one risk for the Saudis: If demand is being impacted by the current level of prices, there’s something to be said (if you’re a producer) for letting prices fall to levels where demand can stabilize naturally, unless you have reason to believe prices don’t actually reflect supply/demand realities. There’s no reason to believe that right now, which means Riyadh is simply trying to keep prices high enough to support spending on domestic priorities. Not all of Mohammed Bin Salman’s priorities meet even a loose definition of prudent, which leads one to conclude that the Kingdom’s policies may be even more self-serving than usual.

It doesn’t help that the EIA isn’t publishing inventory data this week, leaving market participants to fly partially blind.

From a bigger picture perspective, I still harbor grave doubts about humanity’s willingness and capacity to successfully transition away from fossil fuels. I think it’s far more likely that our species continues to court disaster on that front, and on several other fronts too. At the least, rolling bouts of commodities volatility seem inevitable, which to me suggests energy stocks are just as good a portfolio hedge as anything in a world careening from catastrophe to catastrophe.