Oil Could Not Sustain Yemen Rally

0
134

Middle East MapIt looked for a second there that the price of oil retained its geopolitical sensitivity. For the longest time, if there was any kind of bad news coming out of the Middle East, you can bet that it would put strong upward pressure on the price of global oil. It appears that the recent disturbances in Yemen have succeeded in doing that. It seemed for a while that the political sensitivity of the global crude oil market has come back.

Well, on Friday, the price of oil fell below the $50 per barrel mark yet again. We are handed yet another reminder that the rules have changed. For the longest time, the price of oil was very sensitive to whatever the oil minister, a rebel group, tension with Israel, or other players in the area would bring to the table. You can bet that oil would move upwards.

Well, not anymore. It appears that while there is still some sensitivity left in the oil pricing equation, that sensitivity is much more short-lived than before. It has a very short staying power, and the market goes back to the larger picture. The larger picture is that there is just too much oil and the global demand is not there.

Keep in mind that global demand is still growing, but it is not growing at a high enough rate for it to impact the price of oil on a sustainable basis. This is the rough spot that the price of oil finds itself in. It is going to take a very big event to either move oil to a new range downwards or to spike it up to a new range upwards.

LEAVE A REPLY

Please enter your comment!
Please enter your name here