When WTI futures turned negative in April, it was something never seen before, and hopefully, something that will never be seen again. As unusual as it was, though, it was understandable. Economies around the world had been completely shut down almost overnight. Driving and flying, and therefore oil consumption, had dropped to just about zero, and all that happened too quickly for production to adjust. There was still oil coming out of the ground, but nobody was using it and there was nowhere to put it. Prices had to collapse. It was a simple, if exaggerated, supply, and demand issue.
The recovery from that has been quite remarkable, given the circumstances. Driving and flying aren’t yet back to previous levels, but crude futures (CL) have been trading in a fairly respectable $35-$45 range for three months or so. That is way off the highs in the $60s at the beginning of the year, but manageable for most producers.
There are, however, three reasons to think that we may be soon breaking out the bottom of that range.
1: It’s the Economy, Stupid!
Let’s face it, even though the White House is working overtime to have you believe otherwise and the stock market has, until quite recently been booming, the U.S. economy is a bit of a mess. People are going back to work and growth has returned, but at nowhere near the pace anticipated by the bulls a few months ago, and we are still way off the strength we had gotten used to.
An unemployment…
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September 25, 2020 at 11:00PM
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3 Reasons To Be Bearish On Oil - OilPrice.com
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