16-12-2015, 11:45 AM
(16-12-2015, 10:17 AM)BlueKelah Wrote:(15-12-2015, 09:24 PM)LionFlyer Wrote: RDS-B is trading close to May 2009 levels. I think downside is rather limited, even if it is a prolonged event. If anything, history suggest this to be unlikely.
Anyway, the way oil prices move up and down seems to artificially distorted and deeply inefficient.
[Image: Brent_Spot_monthly.svg]
If history is any guide, oil had been trading on average at sub $40 levels during the decades before 2003, where the property/credit bubble started and took off in US and Europe. During the GFC prices fell back to sub $40 levels again. It does feel like sub $40 should be the "historical" guide.
Barring any crazy spikes in global demand or dips in global supply (which is now almost in glut status with a lot of floating oil sitting around), without speculation or price fixing, $40 already should be a pretty good price for oil.
Even with the spike to $60 earlier this year, oil was already 50% too expensive.
It seems central banks can only do so much to temporarily sustain inflated asset prices in their respective regions. Commodities prices are more an international thing and oil price will be hard to manipulate for an extended period.
The spike in oil prices was largely due to rampant speculation, hedge funds went crazy and large spec net longs were an eye popping 400k contracts at the peak of the bubble. I got a feeling these guys won't be coming back soon, the wounds are still raw from the rout in the last 12 mths.