Oil Touches 3 Month Low

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.

via CNN

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza