The price of oil rose dramatically Tuesday, posting its best one-day performance since 2012. All of this occurred in a market with oversupply concerns still unresolved and a continuing host of short artists poised to pummel futures prices at any opportunity.
So, if the environment remains essentially the same, why the rise in prices?
Here's why - in addition to where oil prices are headed next...
The pundits continue to hawk the same reasons for the fall in crude oil prices today.
These are always "spearheaded" by comments about surging global supply led by the onslaught of unconventional (tight and shale) oil production in the United States.
Invariably, what's missed by these "TV sages" are the pricing dynamics kicking in that virtually guarantee an increase in oil prices as we move into 2015.
Good morning! Stock market futures for Tuesday, Jan. 13, forecasted a 74-point gain over yesterday's close. In the last session, the Dow Jones plunged 96 points after crude oil prices crashed more than 4%.
Today, investors will react to the kickoff of earnings season. Watch for reports from KB Home (NYSE: KBH), Kinder Morgan Inc. (NYSE: KMI), and CSX Corp. (NYSE: CSX).
Current crude oil prices in the United States were on pace for a two-day winning streak Thursday amid modest gains.
In early afternoon trading, WTI prices were up $0.04, or 0.08%, to $48.69 a barrel. Brent crude, meanwhile, was lower by $0.25, or 0.49%, to $50.91 just after noon.
Getting started this year took a bit longer than usual.
When I returned home from the Bahamas, I had to hook up an entirely new system of computers and peripherals. To top it off, everything is in a new version of Windows.
Talk about a monopoly! After a few beers, I would be happy to tell you what I really think of it.
Finally, things are now getting back to normal.
Of course, the oil price "Grinch" is still with us. He outstayed his welcome weeks ago, but with the shorts still driving oil prices lower he's decided to extend his stay.
And as the first two trading sessions this week have shown, the instability in the energy sector remains as well.
But as I'll show you, it's not all bad news.
For one portion of the industry, lower oil prices actually mean higher profits...
Oil prices today (Monday) dropped to new yearly lows after spending much of the morning on the rise.
At 1:00 pm EST, WTI oil fell more than 3% to $52.90 per barrel for February delivery. Brent oil was down 2.8% to $57.79 in afternoon trading.
Here's why crude oil prices are so volatile today and what investors can expect now...
My recent meetings in Dubai highlighted the profound change that will turn the balance of power in the energy industry on its head.
For years, OPEC was the puppet master, and the United States (and the rest of the world) were the puppets. They pulled the strings, and we danced. OPEC set the price of oil. OPEC controlled the supply.
But those days are ending. After dictating the course of oil prices for more than 50 years, OPEC is finding its influence diminished.
OPEC's oil ministers can read the handwriting on the wall as well as anyone. Not only are they about to lose the largest energy market in the world, but they'll soon be competing for the markets that used to be theirs for the taking.
Because in 2015 the United States will start pulling the strings...
Oil prices continued to fall this week but stock markets shrugged off the disarray this continued to cause in global markets after Janet Yellen whispered soothing words in their ears after the Fed's last meeting of the year on Wednesday. Mrs. Yellen has become a "bull whisperer" - fearful of upsetting the equity market, she cloaks her words in indirection and equivocation in an effort to keep them calm as she prays for an economic lift-off that will take her institution off the hook.
Unfortunately, her patient is likely to be very disappointed, for it would take an economic miracle the likes of which hasn't been seen in this country since the years after the Second World War to deal with the mountain of existing debt and future liabilities that are going to bury us.
Over the past few of days, three separate prognosticators have claimed the fall in oil prices is a "black swan" event - in other words, an outlier, a development that fails to follow any normal pattern.
This isn't a black swan, but calling it one may be a good way of clouding up what really is happening.
In this case, there's another motive at work - and the black swan becomes a convenient cover...
During the first Arab Spring, some countries were able to avoid the unrest by buying off their populations with goodies. But today in those countries, unemployment is increasing and alternatives to centrally subsidized survival are disappearing.
That's because this untenable balance has been sustained by the price of oil. As long as oil flowed, net outflows from the national coffers could be sustained.
Crude oil prices today (Wednesday) plummeted again after the U.S. Energy Information Administration (EIA) reported an increase in U.S. oil supplies.
The EIA reported that U.S. supplies were up by 1.5 million barrels in the week ending Dec. 5. Analysts had been expecting a drop of 3 million barrels.
West Texas Intermediate (WTI) crude oil dropped to $63.38 yesterday (Monday). At that level, the price of oil is now down more than 42% since September of 2013.
As this crude oil price chart shows, that's the fourth-largest bear market for oil in the last 30 years.
And while this isn't the biggest drop for oil, it is the longest bear market among the top five dips.
Keith Fitz-Gerald knows how to invest in the energy sector. He says it's still minting millionaires.
But right now, with oil prices so low, mainstream investors are too caught up in the short term.
Every 10 or 20 years a series of watershed events come together that change the face of the international energy picture.
The Saudi-led war on crude oil prices is one of these pivotal situations.
And while others fret about what the OPEC production move means, I'm actually meeting with the guys who made the decision.
I can tell you that what's unfolding here in the desert will have a decisive impact on producers, end users, and government/corporate policymakers worldwide.
Of course, I've been involved in a fair share of all of this for over 40 years, from both the public and private sector side.
Much of that is coming together in my current slate of meetings with some of the most powerful people in the energy world.
Crude oil prices have fallen precipitously for five straight months. Since June, West Texas Intermediate (WTI) has dropped 29.3%.
And Bakken Shale stocks have been taking the brunt of that price collapse.
