Bearish Pressure On Oil Prices Remains Elusive
The post Bearish Pressure On Oil Prices Remains Elusive appeared on BitcoinEthereumNews.com. 378913 01: Pennzenergy Company Oil Exploration Drilling Rig In The Gulf Of Mexico During Sunset. (Photo By Getty Images) Getty Images These are confusing times for the oil market, with forecasts continually calling for a growing surplus, yet prices remain strong with some analysts suggesting a new spike is possible. OPEC+ has been criticized for unwinding the voluntary cutbacks more quickly than initially proposed, while fears of demand weakness due to uncertainty about U.S. tariffs suggests they might be overly optimistic about the market balance. In my opinion, one of the best observations explaining market behavior came from John Maynard Keynes, who was an active trader and at one point had massive losses in his portfolio. He opined that economics don’t explain market behavior so much as traders’ perception of the market economics. That still holds true today, and in no place more so than oil trading. ‘Crisis fatigue’ is a known phenomenon where traders, facing lengthy geopolitical threats, ultimately grow weary and begin to discount the potential for, or impact of, supply side disruptions. Israel’s war in Gaza is one example, as violence involving that country and its various neighbors initially raised fears that the violence will spread to oil producing regions. Eventually, the perceived probability of a disruption receded and the security premium with it. The equivalent now appears to be ‘recession fatigue.’ Fears of economic dislocation have put downward pressure on the price of oil since Trump’s inaugural, with government layoffs suggesting rising unemployment, deportations of workers raising fears of inflation especially for groceries, and tariffs appearing likely to boost inflation and depress spending. Yet unemployment remains low, inflation has only marginally risen, and the economy was strong in the second quarter. But I recently came across a quote from M.I.T.’s Rudiger Dornbusch (in Ken Rogoff’s Our…
The post Bearish Pressure On Oil Prices Remains Elusive appeared on BitcoinEthereumNews.com.
378913 01: Pennzenergy Company Oil Exploration Drilling Rig In The Gulf Of Mexico During Sunset. (Photo By Getty Images) Getty Images These are confusing times for the oil market, with forecasts continually calling for a growing surplus, yet prices remain strong with some analysts suggesting a new spike is possible. OPEC+ has been criticized for unwinding the voluntary cutbacks more quickly than initially proposed, while fears of demand weakness due to uncertainty about U.S. tariffs suggests they might be overly optimistic about the market balance. In my opinion, one of the best observations explaining market behavior came from John Maynard Keynes, who was an active trader and at one point had massive losses in his portfolio. He opined that economics don’t explain market behavior so much as traders’ perception of the market economics. That still holds true today, and in no place more so than oil trading. ‘Crisis fatigue’ is a known phenomenon where traders, facing lengthy geopolitical threats, ultimately grow weary and begin to discount the potential for, or impact of, supply side disruptions. Israel’s war in Gaza is one example, as violence involving that country and its various neighbors initially raised fears that the violence will spread to oil producing regions. Eventually, the perceived probability of a disruption receded and the security premium with it. The equivalent now appears to be ‘recession fatigue.’ Fears of economic dislocation have put downward pressure on the price of oil since Trump’s inaugural, with government layoffs suggesting rising unemployment, deportations of workers raising fears of inflation especially for groceries, and tariffs appearing likely to boost inflation and depress spending. Yet unemployment remains low, inflation has only marginally risen, and the economy was strong in the second quarter. But I recently came across a quote from M.I.T.’s Rudiger Dornbusch (in Ken Rogoff’s Our…
What's Your Reaction?
