Crude oil prices are soaring back after getting smashed on last week’s stock market correction. Of course, all the selling in stocks and oil are not about what is happening now but what may or may not happen in the future.
Many are saying that U.S. oil prices are falling due to the projections for rising U.S. production. Predictions by the IEA and the EIA about a surge in oil suggest that U.S. oil production, which supposedly stands above 10 million barrels a day, will soon exceed 11 million barrels a day. Yet, the truth is that if demand growth stays at the rate we are currently at, then we will need that additional oil to meet global demand. Still, worries about global growth in recent days surrounding the stock market correction are causing some to think an oil demand slowdown is in store.
Are markets completely in the clear? Probably not. Yields still remain key and though the blame was thrown at the XIV, these movements are a product of leverage in general, coupled with extremely low volatility over an extended period of time.