Something Wicked This Way Comes from the Tar Pits and Oil Sands – Crude oil price rally destroyed

The crude oil price rally has been completely destroyed, though I’ll admit I was wrong when I predicted crude oil prices would plummet in March or April as the perfect storm developed against oil prices. Instead, they rallied. In spite of that, I continued to believe my error was in timing and not in fact – not in the fact that a another harsh fall in oil prices was beating a path to our doors.
Crude oil prices beaten down by a storm still building
So, I continued to write articles about the forces building against oil prices, even in the face of a strong rally, which many believed would set a new position for oil for the remainder of 2016. That storm has, as of today, completely clawed back the post-March rally by taking crude oil prices back to a three month low and to where they stood at the start of the year as well. West Texas Intermediate just struck $42/barrel today.
That said, oil still has not gone back into the dark valley from which it came in the winter of oil’s discontent, and to which I said it would return.
I still believe the full strength of this storm is yet to be felt. I have to, however, state a caveat to my oil price predictions (of something below $30/barrel again this year) … and not because I want to hedge my bet. I don’t like hedging my bets, as I prefer to hit them straight in the nose for a clear victory.
As stated in an earlier article, however, we have no way of knowing anymore what the Fed with its cloaked operations, liberal hand, and infinite money potential is doing at any moment to manipulate the price of the oil market in the same way it has admitted to doing with the stock market. Anytime the Fed sees oil bringing a serious gale against its heavily encumbered member banks, you can be sure it will intervene to save the banks (at any cost). The Fed has become so deeply involved in markets that there is no longer any basis for assuming any market will run as a truly free market.
Nevertheless, I think forces are moving in that will ultimately blow everything outside of the Fed’s control. When we arrive at that inexorable day when all the oil tanks of the world – and all the tankers on land and sea – are full (as I’ve said we are likely to do and as appears to be more the case all the time), it will be hard for the Fed to manipulate the price of oil with nowhere to store the oil it buys. Reality finds a way to leak in or seep out … eventually.

This post was published at GoldSeek on 26 July 2016.