None of the mainstream messages are untrue. Yes, there’s an oversupply of crude in the world today. Yes, global growth (and hence demand for crude) is anemic at best. Yes, the Saudis are unhappy with the U.S. shale revolution. Yes, the Saudis would be delighted to see Iran squeezed to death and Russia squeezed to weakness. Yes, there is marked divergence in monetary policy today, a divergence which pushes the U.S. dollar higher and commodities priced in U.S. dollars (like oil) lower. So stipulated.But all of these things–particularly everything to do with supply/demand fundamentals–were just as true three months ago, when oil was $40 higher.
Wow. Interesting. So what’s the cause?