I wrote some last week about an oil glut in the US market, and the markets have actually rallied a bit since that article was published. However, the fundamentals of the oil market are essentially unchanged, and the US economy, no matter how much you hear about these “green shoots” (which I have yet to see the slightest evidence of existence) is still in very rough shape. The best that can be said is that we are no longer “cliff diving”, which is short for look at a chart where the lines of measurement head directly south.
People don’t look much at supply and demand these days, and they talk about it even less, but it is good ol’ supply and demand that determines the price of all material in a capitalist society. Oil is no exception, and demand has been off for quite some time, hence, the unusually large amount of surplus in our current supply. To combat this, several oil company economists have issued a few reports that indicate the supply is not nearly as large as is being reported, but my gut instinct is to not trust oil company economists.
INO TV has a nice video that will give you some excellent insight into some of the movements of oil stock prices through an ETF named USO…I think that it is pretty interesting.
Hope you find the video interesting and make sure you check out the INO-TV training series, which is just excellent at:
