Oil Analyst Warns of Speculative Bubble

If the man who called the 2015 crude collapse is right, the oil market could be the next area to see a sharp pullback.

Oil, which is seeing its best start to a year since 2006, has entered a danger zone, according to Tom Kloza of the Oil Price Information Service.

Kloza, the firm’s global head of energy analysis, made the call on CNBC’s “Futures Now” on Tuesday just as Wall Street was coping with the stock market’s worst day since last August.

West Texas Intermediate graph

“There’s some collateral damage from the stock market right now. I don’t believe this is the bloodletting that’s due because of the tremendous speculative bubble and the money on the crude oil side,” Kloza said. “That will come at a later date.”

That day could be just weeks away, due to changing demand dynamics and “swelling” global markets, he added.

“All of the demand growth, all of it, is overseas. It’s not in the United States,” he said. “My sense is that global markets give back some of these very, very robust financial gains.”

Brent oil has soared 97 percent and WTI crude prices are up nearly 90 percent over the past two years. Right now, Brent is trading around $68 a barrel and WTI is bouncing around $64.

via CNBC

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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