Crude oil wasn’t invited to the big party on Wall Street this month.
Not long ago, oil prices looked poised to fly back above the $60 mark. All of a sudden now, the next stop looks more like $40 a barrel.
Crude crumbled to three-month lows of $42.36 a barrel on Tuesday. That leaves oil down 12% in July alone, making it a big outlier in a month that’s been great for other assets like stocks, bonds, emerging markets and of course, anything to do with Pokemon Go.
So why is oil in a downdraft? Oil traders, as they’re known to do, got a tad too excited about the long-awaited rebalancing of the market.
The world still seems to have more oil than it needs — and the epic supply glut has even spread into gasoline. Gasoline inventories are sitting at the highest levels ever for this time of the year, despite the fact that it’s the heart of summer driving season.
“Once again, the markets got ahead of themselves,” said Matt Smith, director of commodity research at ClipperData.