• 3 minutes In a Nutshell...
  • 5 minutes CV19: New York 21% infection rate + 40% Existing T-Cell immunity = 61% = Herd Immunity ?
  • 7 minutes Australian renewables zone attracts 27 GW of solar, wind, battery proposals
  • 9 minutes Why Oil could hit $100
  • 6 mins COVID is real now
  • 7 mins Is Biden the poster child for White Privilege ? DNC needs to replace him now before it's too late.
  • 1 day Is the oil & gas industry on the way out?
  • 7 hours The Boris Yeltsin of America
  • 1 day Is The Three Gorges Dam on the Brink of Collapse?
  • 2 days Better Days Are (Not) Coming: Fed Officials Suggest U.S. Recovery May Be Stalling
  • 2 days Sources confirm Trump to sign two new Executive orders.

Breaking News:

Shale CEO: U.S. Has Passed Peak Oil

Another False Rally in Oil

Most people who study energy markets believe that, at some point, oil will recover, at least partially. Not even the most bullish observers see $110/Barrel oil returning in the foreseeable future but a bounce back to around $50 is a common prediction. Those predictions got a lot of airing this week as oil bounced off of the recent lows in the mid-$20s, but a look at the reasons for that bounce and the fundamental situation suggests that this may be just another false dawn, and at least one more test of the lows will be needed before there can be a meaningful, sustainable recovery in oil.

The main thing that sparked the rise was the revelation at the end of last week by the UAE Oil Minister that some OPEC countries were talking about the supply situation. As it became known that Russia and, more importantly, Saudi Arabia were involved it looked like something of real significance. There has been so much talk of the complete collapse of OPEC that any hint of agreement was seen as a positive for the commodity.

That sentiment was so strong that, even when the limited and somewhat disappointing details of the proposed agreement were released this week the rally continued. The fact that even the Iranians agreed to the proposed production freeze at current levels added fuel to the fire. In reality, though, a freeze at current levels does nothing to alleviate the pressure on oil. We are at record high production levels, and it will take some time for global demand, which…




Oilprice - The No. 1 Source for Oil & Energy News