But the overall medium-term trajectory for oil prices no longer appears to be in doubt.
As I have indicated on several occasions recently, the downward movement in May and June was an overreaction to softness in the sector, with the ultimate slide over twice as large as any objective reading of the fundamentals would justify.
We are now witnessing a return to a "normal" oil market. That doesn't mean a lack of volatility or a narrow range of trading.
This normal is hardly boring.
These Three Factors Determine Oil PricesWhat it does mean is that oil prices will be determined by three factors:
- Supply and demand;
- The spread between benchmark crude grades; and
- Geopolitical tensions and events. Here, we are considering matters we've discussed here a number of times.
That results in something I have discussed previously - a sort of "cart leading the horse."