Raise your hand if you’ve heard this before.
Oil has a bad couple of months (which is great for those of us who drive, but not as great for the economy), and after a while it begins to climb. This climb gets investors excited for the future, only to have oil hit a wall and sink back down.
That’s a pattern that happened in the past, and it’s a pattern investors are worried could be happening again.
“There are dangerous parallels to 2015,” said Eugen Weinberg, head of commodities research at Commerzbank in Frankfurt. “The market already appears overheated and a correction is overdue.”
If the prediction ends up coming true, it’s an unfortunate turn of events for oil, which has been steamrolling higher for the past couple of months. Even production issues and a rumor of an oil freeze haven’t done enough to derail oil. However, just like in 2015, the environment for oil is waning.
A group of oil wells that have yet to be tapped could bring almost half a million barrels into the marketplace if activated. With the supply of oil already exceeding demand, this could put the excess supply over-the-top and bring oil back to $30 a barrel.
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