The drop in oil prices is ominous
The market was too quiet for too long
The lack of volatility in oil since early June is inexplicable. It was a time when broader financial market volatility was extraordinary and crude was stuck to $40/barrel.
As prices stabilized, more companies brought production back online. Meanwhile, OPEC was expected to keep carrying the weight. In China, there was a glut of tanker ships in a sure sign of stockpiling. In Libya, small oil shipments are resuming.
What appears to have broken the oil market though is a slump in demand. The summer driving season is over. The reopening bump is fading even if the Fri/Sat gasoline numbers on the long weekend were strong, according to GasBuddy.
Technically, the picture is worrisome. The 200-dma and 55-dma easily gave way last week and The July lows fell today. Now, there isn't much support until the area around $35 where there is the 100-dma and the mid-June low.