Expect more crude oil price volatility as the global oil market can flip from a global supply surplus to a global supply deficit at the drop of a hat. The market is trying to assess whether more sources of oil will get us to the point where daily global oil production is once again ahead of our daily consumption. So far it has not.
The biggest crude oil draw since 2016 was not enough to stop oil from a major drop in price. A slew of oil supply side stories includes the resumption of Libyan crude exports, an increase in Saudi Arabia crude output, possible waivers on U.S. sanctions on Iranian oil and reports that oil is on the agenda when President Donald Trump and Russian President Vladimir Putin meet next month.
Just a few years ago the mantra on crude oil prices was “lower for longer.” Irrational pessimism about the dynamic power of the U.S. economy as well as a misunderstanding about the potential and risks associated with shale oil production substantially impacted investment decisions.
We had this doom and gloom attitude that the U.S. days were behind us and our manufacturing in the United States was hopelessly lost forever.