Forget the Noise: Oil Prices Won’t Crash Again

Oilprice.com ^ | 06-03-2015 | Dan Doyle

[bananaman22]

Oil rising to $60/bbl is displeasing some people, particularly the shorts. Some of the more extreme –those calling for oil in the $20’s – have wisely fallen silent. Others, like Goldman Sachs, who a few months ago had set their flag in the 30’s, have unfortunately not gone so silent. They recently moved their flag into the 40’s but they continue to talk a lot. A better strategy – though one that would require some humility — would be to stop talking and listen.

Recent and compounding data will soon wash away the walls of worry erected by the experts. Four consecutive weeks of inventory draws, each one larger than the last is irrefutable proof that a 60% decline in the rig count means something.

[Trapped Behind Enemy Lines]

prices fluctuate.

oil no exception.

[Paulie]

So many crosscurrents in the crude market. US shale, OPEC, Iran resuming shipments, trade-weighted value of the dollar, potential war in the ME, world economies going south, 0bama/Jarrett’s war on hydrocarbons...

This kind of uncertainty and instability is a oil trader’s dream, isn’t it?

[arthurus]

They fluctuate but for a time they have reached a market equilibrium and probably will not rise or fall by a lot until the technology is significantly more efficient. If that improvement occurs at the pace of actual inflation then oil prices will not rise appreciably. If it is at a greater pace than inflation then oil prices will trend down but will not crash or fall. A tech breakthrough and a new method that comes on line could crash the oil price again. Oil will not decrease to the point that no one makes any money nor increase to the point that the volume demand falls below profitability. That, of course, is all out the window if the USA and other countries nationalize the last of the privately owned oil companies.

[captain_dave]

Oil prices will not crash again...until they do.

[Sam Gamgee]

I don’t know if it is hedge funds who are to blame, but the markets, stock markets especially, but also hard asset markets like oil, continue to show how inefficient they are. Oil can’t be worth $40 in the same year it was trading at $90. Somewhere in the middle is the fair price based on demand and supply fundamentals. One wonders how the majority of traders can be so wrong so often? Something is causing volatility that we have not seen the likes of before.

[Kartographer]

Oil prices weren’t suppose to crash, oil was going to supply the US with a prolong period of unequaled economic growth! Well that’s what the ‘Oilbugs’ claimed.