Oil made 24% gains yesterday
That's the good news. However, the bad news is that because of recent falls that only equated to a $4.85 increase. A little less impressive now. The fundamental picture for oil remains very bleak. In fact comparing the oil price swings to 2008-2009 shows that these moves are relatively modest. The difference of course is that in May 2008 US oil price was around $150. Nevertheless, here is the comparison of oil swing price:
The picture for oil looks bleak
Here are some of the reasons for more oil downside:
1. Over supply. In April Saudi is planning to ramp up their production to full throttle putting it into the 12/13mbpd figure.
2. Slowing demand. With many airlines grounded, normal travel and oil consumption radically down the demand has dried up. Even the canals in Venice have become clearer as all the traffic leaves the waterways. Apparently even dolphins have been turning up to catch a glimpse of the sights with all the tourists away.
3. Global oil volatility is at record levels with the CBOE/NYMEX Oil volatility index rocketing to all time highs at 166 on Wednesday this week
So, all in all, we are not out of the woods yet and I am not confident a bottom in oil is in. We look to be headed for oil price to head under $20....
