econ bespoke marketwatch). Instead the oil price has been supported by speculation on a v-shaped recovery like in the 2009 (commodities driveby). I think the Brent crude has to drop sharply soon.
1. Oil is still expensive. We have still to pay 3-times we had to pay before 2002. And the drop of the oil prices has been partially compensated by the rally of the Dollar. Last summer oil cost in € 0.84 around (oil price $114 : exchange rate 1.36 = 84 cent ), today the price is €0.52 (54 : 1.05 = 52 cent), just a minus of 38%. The Japanese Yen also dropped significantly and reduced the effect for Japanese buyers as well. And US consumers also don´t benefit much from the oil price drop because US gasoline prices fell less and rose in the recent months sharply (fuelgauge gasoline). I think expensive oil is still curbing demand (in the US retail sales have be falling for three months in a row) and encouraging supply.
2. The long-term trend historical trend swings around an oil price of $50 (bloomberg). But, from 2010 till last summer oil cost more than twice because of ongoing speculation on geopolitical induced disruptions, which didn´t occur (oil-chart bubble). A premium of around 100% to the "normal" oil price over years caused the current oil glut. I suppose that oil prices have to drop way below the "normal" ($50) - and stay there for a while - to clear the market. And there are still a lot of speculators who are sitting on huge oil bets who could get squeezed out in the coming months.
3. The February oil rally (dead cat bounce) was based on speculation on a fast recovering oil demand. But shrinking US retail sales and the weak European economy signal otherwise.
I suppose that the high oil price still curbs demand and encourages production. Therefore the oversupply and oil glut are growing and are applying more and more pressure on the oil price.