Economics: Why Did The Oil Bubble Pop Again?

(Drivebycuriosity) - Oil prices are on a free fall again. Since October 10 the financial futures for Brent Crude - the gauge for global oil - and WTI (American oil) both dropped 20%. According to Bespoke investment WTI suffered "the longest streak of consecutive declines, not in the last five, ten, or twenty years, but at least 35 years!  Going back to 1983, there has never been a streak of more than 9 straight days where crude oil traded down on the day" (bespoke) 


It seems that another oil bubble is popping.

As I have explained a month ago the oil market was in a bubble again and the price of oil didn`t reflect the data anymore - as it did in 2014  (driveby). The oil rally through October was fueled by speculation that the Iran sanctions will reduce the global oil supply significantly. But the data don`t confirm the rumors. The International Energy Agency reported recently that the world oil production climbed onto around 100 mb/d. That was 2.6 mb/d higher than a year ago and a new record (oilmarket  ).

So, oil production in the USA and other countries is already overcompensating the reduced Iran oil deliveries. As a result are U.S. crude oil inventories climbing and are about 3% above the five year average for this time of year (gov/wpsr).

It was only a matter of time that the Iran bubble had to burst.