What is happening in the Oil market now?

Hey guys.

Check out this article.
Man…oil is going down.
Literally. Figuratively.


I would like to hear some of your comments on this. Especially those who follow the fundamentals in that market. Or simply fundamentals period.


Let’s talk.

P.S. - Another insightful article.

Aye in recent times oil and risk combine - the thinking is that if business is going down then so too oil demand.

Check out the energy sector on the S&P - the decline in XLE goes back a while - over 5 years:

That’s the 5 year view - choose any time frame and it’s possible to see how investors view energy:

But why the decline?

Price on wti was over 100$ per barrel mid 2014 - that made oil extraction attractive especially for frackers - then came Pres Trump who is very much in favour of lower oil prices, then the Saudis - which surprises some people - are happy with prices around the 40-50 mark for various reasons - I mentioned this back 3 years ago here:

Crude Oil and oil markets

Anywyas, bottom line is that it will hopefully a long time before the world sees $100 oil :slight_smile:

I liked this thinking from Investopedia back last year:

Why did oil prices drop so much in 2014?

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I remember this conversation back in Nov 2018 with rram regarding oil.

To set the scene there had been talk of oil production cuts from the mid east with the intention of increasing price.

When that particular news item was released Pres Trump was mid flight back from Europe. Lots of traders picked up on the news and figured that price would rise accordingly.

The President when briefed used the most useful tool that many of the algo’s are tuned to - twitter - to ensure price continued it’s path.

Read on down until the President’s tweet:

Thanks for all that Peterma!!
I appreciate the thoughts, and insights.
And keeping the discussion alive.
I do think that this just might over take the prevailing topic of Coronavirus.

The problem with the virus thing is the news.

Headline in a local Sunday newspaper front page today ’ Health Service Increase Mortuary Space’ - this is sensationalism at it’s worst - but this is what sells news.
(we have a total of 7 confirmed cases of the virus)

Sadly the news from Italy is not so good in that deaths rose by 133 today - total deaths 366 out of 7375 infections

WHO figure a 3.4% mortality rate.

The reason for the poor numbers in Italy reflect the fact that the virus was spread early Jan under the radar - now a total lock-down in the North of the country is in effect

The unprecedented restrictions, which will impact some 16 million people and stay in force until 3 April, were signed into law overnight by Prime Minister Giuseppe Conte.
(rte news)

So imagine the economic effect - this is what will impact prices until better weather in the Spring arrives.

I got ‘cha.

There was a BP member posting recently regarding the ethics of trading or whether it’s possible to choose trades that adhere to being ‘ethical’.

Tomorrow morning the Yen will be bought, USD likely sold, Oil def sold and good chance some gold buying.

Stocks in Europe will be under pressure and likewise the US futures. Possibly some more Govt bond buying into the mix.

All this and there are people suffering - this is my difficulty.

Anyways, goodnight Mike, sometimes I think about these things.

Edit: forgot to mention - seems that the virus is transmitted via our hands principally - apparently lives in the oil on our skin - locally it’s impossible to buy alcohol hand wash like they use in hospitals - still easy to buy the hand de-greaser gel that motor mechanics use :slight_smile:


Is not a pretty sight right now. Futures tripped the 5% panic button and were halted accordingly. US 2 yr yields gone into negative territory European stock indicies in panic selling.

There is a glimmer of hope that when the US market opens some sense will return… let’s see.

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The oil market is facing a very big challenge at the moment in most of the countries due to the exhaustion of oil in the deposits. The transportation of crude oil is soon becoming a biger challenge due to the quarintine messures that has been put between countries due to the threat of corona virus( COVID–19).

Russia and Arab and also the new Chinese virus affect all markets, not just crude oil.