Oil prices flag recession risk as Iranian geopolitical tensions rise

Today, we have “lies, fake news and statistics” rather than the old phrase “lies, damned lies and statistics”. But the general principle is still the same.  Cynical players simply focus on the numbers that promote their argument, and ignore or challenge everything else.

The easiest way for them to manipulate the statistics is to ignore the wider context and focus on a single “shock, horror” story.  So the chart above instead combines 5 “shock, horror”  stories, showing quarterly oil production since 2015:

  • Iran is in the news following President Trump’s decision to abandon the nuclear agreement, which began in July 2015.  OPEC data shows its output has since risen from 2.9mbd in Q2 2015 to 3.8mbd in April – ‘shock, horror’!
  • Russia has also been much in the news since joining the OPEC output agreement in November 2016.  But in reality, it has done little.  Its production was 11mbd in Q3 2016 and was 11.1mbd in April- ‘shock, horror’!
  • Saudi Arabia leads OPEC: its production has fallen from 10.6mbd in Q3 2016 to 9.9mbd in April- ‘shock, horror’!
  • Venezuela is an OPEC member, but its production decline began long before the OPEC deal.  The country’s economic collapse has seen oil output fall from 2.4mbd in Q4 2015 to just 1.5mbd in April- ‘shock, horror’!
  • The USA, along with Iran, has been the big winner over the past 2 years.  Its output initially fell from 9.5mbd in Q1 2015 to 8.7mbd in Q3 2016, but has since soared by nearly 2mbd to 10.6mbd in April- ‘shock, horror’!

But overall, output in these 5 key countries rose from 35.5mbd in Q1 2015 to 36.9mbd in April.  Not much “shock, horror” there over a 3 year period.  More a New Normal story of “Winners and Losers”.

So why, you might ask, has the oil price rocketed from $27/bbl in January 2016 to $45/bbl in June last year and $78/bbl last Friday?  Its a good question, as there have been no physical shortages reported anywhere in the world to cause prices to nearly treble.  The answer lies in the second chart from John Kemp at Reuters:

  • It shows combined speculative purchases in futures markets by hedge funds since 2013
  • These hit a low of around 200mbbls in January 2016 (2 days supply)
  • They then more than trebled to around 700mbbls by December 2016 (7 days supply)
  • After halving to around 400mbbls in June 2017, they have now trebled to 1.4mbbls today (14 days supply)

Speculative buying, by definition, isn’t connected with the physical market, as OPEC’s Secretary General noted after meeting the major funds recently:  “Several of them had little or no experience or even a basic understanding of how the physical market works.”

This critical point is confirmed by Citi analyst Ed Morse:  “There are large investors in energy, and they don’t care about talking to people who deal with fundamentals. They have no interest in it.

Their concern instead is with movements in currencies or interest rates – or with the shape of the oil futures curve itself. As the head of the $8bn Aspect fund has confirmed:

“The majority of our inputs, the vast majority, are price-driven. And the overwhelming factor we capitalise on is the tendency of crowd behaviour to drive medium-term trends in the market.” (my emphasis).

OIL PRICES ARE NOW AT LEVELS THAT USUALLY LEAD TO RECESSION

The hedge funds have been the real winners from all the “shock, horror” stories.  These created the essential changes in “crowd behaviour”, from which they could profit.  But now they are leaving the party – and the rest of will suffer the hangover, as the 3rd chart warns:

  • Oil prices now represent 3.1% of global GDP, based on latest IMF data and 2018 forecasts
  • This level has been linked with a US recession on almost every occasion since 1970
  • The only exception was post-2009 when China and the Western central banks ramped up stimulus
  • The stimulus simply created a debt-financed bubble

The reason is simple.  People only have so much cash to spend.  If they have to spend it on gasoline and heating their home, they can’t spend it on all the other things that drive the wider economy.  Chemical markets are already confirming that demand destruction is taking place.:

  • Companies have completely failed to pass through today’s high energy costs.  For example:
  • European prices for the major plastic, low density polyethylene, averaged $1767/t in April with Brent at $72/bbl
  • They averaged $1763/t in May 2016 when Brent was $47/bbl (based on ICIS pricing data)

Even worse news may be around the corner.  Last week saw President Trump decide to withdraw from the Iran deal.  His daughter also opened the new US embassy to Jerusalem.  Those with long memories are already wondering whether we could now see a return to the geopolitical crisis in summer 2008.

As I noted in July 2008, the skies over Greece were then “filled with planes” as Israel practised for an attack on Iran’s nuclear facilities.  Had the attack gone ahead, Iran would almost certainly have closed the Strait of Hormuz.  It is just 21 miles wide (34km)  at its narrowest point, and carries 35% of all seaborne oil exports, 17mb/d.

As Mark Twain wisely noted, “history doesn’t repeat itself, but it often rhymes”.  Prudent companies and investors need now to look beyond the “market-moving, shock, horror” headlines in today’s oil markets.  We must all learn to form our own judgments about the real risks that might lie ahead.

 

Given the geopolitical factors raised by President Trump’s decision on Iran, I am pausing the current oil forecast.

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Chemicals flag rising risk of synchronised global slowdown

Chemicals are easily the best leading indicator for the global economy.  And if the global economy was really in recovery mode, as policymakers believe, then the chemical industry would be the first to know – because of its early position in the value chain. Instead, it has a different message as the chart confirms:

  • It shows changes in global production and key sectors, based on American Chemistry Council (ACC) data
  • It highlights the rapid inventory build in H2 as oil and commodity prices soared
  • But since then, all the major sectors have moved into a slowdown, and agchems into decline

As the ACC note:

“The global chemical industry ended the first quarter on a soft note.  Global chemicals production fell 0.3% in March after a 1.0% drop in February, and a 0.6% decline in January. The last gain was 0.3% in December.

This, of course, is the opposite of consensus thinking at New Year, when most commentators were confident that a “synchronised global recovery” was underway. It is therefore becoming more and more likely, as I warned in January, that policymakers have been fooled once again by the activities of the hedge funds in boosting “apparent demand”:

“For the last 6 months, everyone who buys oil or other commodity-related products has been busy building as much inventory as they could afford. In turn, of course, this has made it appear that demand has suddenly begun to recover. At last, it seems, the “synchronised global recovery” has arrived.

Except, of course, that it hasn’t. The hedge funds didn’t buy 15 days-worth of oil to use it. They bought it to speculate, with the OPEC-Russia deal providing the essential “story” to support their buying binge.”

This downturn is worrying not only because it contradicts policymakers’ hopes, but also because Q1 volumes should be seasonally strong:

  • Western companies should be restocking to meet the surge of spring demand
  • Similarly, China and the Asian markets should now be at peak rates after the Lunar New Year

HIGHER OIL AND COMMODITY PRICES ARE CAUSING DEMAND DESTRUCTION
The problem is that most central bankers and economists don’t live in the real world, where purchasing managers and sales people have bonuses to achieve.  As one professor told me in January:

“Economists would tend to be skeptical about concepts such as “apparent demand”. Unless this a secret concept (and it doesn’t seem like it is), other investors should also use it, and then the oil price should already reflect it. Thus, there wouldn’t be gains to be made (unless you’re quicker than everyone else or have inside information)…”

But in the real world, H2’s inventory build has now been replaced by destocking – whilst today’s higher oil prices are also causing demand destruction.  We have seen this many times before when prices have risen sharply:

  • Consumers only have limited amounts of spare cash
  • When oil prices jump, they have to cut back in other areas
  • But, of course, this is only confirmed afterwards, when the spending data is reported
  • Essentially, this means that policymakers today are effectively driving by looking in the rear-view mirror

RISING DEBT LEVELS CREATE FURTHER HEADWINDS FOR GROWTHNew data from the US Federal Reserve Bank of St Louis also highlights the headwinds for demand created by the debt build-up that I discussed last week.  As the chart shows:

  • US borrowing was very low between 1966-79, and $1 of debt created $4.49 in GDP growth
  • Borrowing rose sharply in the Boomer-led SuperCycle, but $1 of debt still created $1.15 in GDP growth
  • Since stimulus programmes began in 2000, however, $1 of debt has created just $0.36 of GDP growth

In other words, value destruction has been taking place since 2000.  The red shading tells the story very clearly, showing how public debt has risen out of control as the Fed’s stimulus programmes have multiplied – first with sub-prime until 2008, and since then with money-printing.

RISING INTEREST RATES CREATE FURTHER RISKS
Last week saw the yield on the benchmark US 10-year Treasury Bond reach 3%, double its low in June 2016.  It has risen sharply since breaking out of its 30-year downtrend in January, and is heading towards my forecast level of 4%.

Higher interest rates will further slow demand, particularly in key sectors such as housing and autos.  And in combination with high oil and commodity prices, it will be no surprise if the global economy moves into recession.

Chemicals is providing the vital early warning of the risks ahead.  But as usual, it seems policymakers prefer to wear their rose-coloured spectacles.  And then, of course, as with subprime, they will all loudly declare “Nobody could have seen this coming”.

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The global economy and the US$ – an alternative view

Every New Year starts with optimism about the global economy.  But as Stanley Fischer, then vice chair of the US Federal Reserve, noted back in August 2014:

 “Year after year we have had to explain from mid-year on why the global growth rate has been lower than predicted as little as two quarters back.”

Will 2018 be any different?  Once again, the IMF and other forecasters have been lining up to tell us the long-awaited “synchronised global recovery” is now underway.  But at the same, they say they are puzzled that the US$ is so weak.  As the Financial Times headline asked:

“Has the US dollar stopped making sense?”

If the global economy was really getting stronger, then the US$ would normally be rising, not falling.  So could it be that the economy is not, actually, seeing the promised recovery?

OIL/COMMODITY PRICE INVENTORY BUILD HAS FOOLED THE EXPERTS, AGAIN
It isn’t hard to discover why the experts have been fooled.  Since June, we have been seeing the usual rise in “apparent demand” that always accompanies major commodity price rises.  Oil, after all, has already risen by 60%.

Contrary to economic theory, companies down the value chains always build inventory in advance of potential price rises.  Typically, this adds about 10% to real demand, equal to an extra month in the year.  Then, when the rally ends, companies destock again and “apparent demand” weakens again.

The two charts above confirm that the rally had nothing to do with a rise in “real demand”:

Their buying has powered the rise in oil prices, based on the free cash being handed out by the central banks, particularly in Europe and Japan, as part of their stimulus programmes.

They weren’t only buying oil, of course.  Most major commodities have also rallied.  Oil was particularly dramatic, however, as the funds had held record short positions till June.  Once they began to bet on a rally instead, prices had nowhere to go but up.  1.4bn barrels represents as astonishing 15 days of global oil demand, after all.

What has this to do with the US$, you might ask?  The answer is simply that hedge funds, as the name implies, like to go long in one market whilst going short on another.  And one of their favourite trades is going long (or short) on oil and commodities, whilst doing the opposite on the US$:

  • Since June, they have been happily going long on commodities
  • And as Reuters reports, they have also been opening major short positions on the dollar

The chart highlights the result, showing how the US$’s fall began just as oil/commodity prices began to rise.

COMPANIES HAVE NO CHOICE BUT TO BUILD INVENTORY WHEN COMMODITY PRICES RISE
This pattern has been going on for a long time.  But I have met very few economists or central bankers who recognise it.  They instead argue that markets are always efficient, as one professor told me recently:

“Economists would tend to be skeptical about concepts such as “apparent demand”. Unless this a secret concept (and it doesn’t seem like it is), other investors should also use it, and then the oil price should already reflect it. Thus, there wouldn’t be gains to be made (unless you’re quicker than everyone else or have inside information)…”

But if you were a purchasing manager in the real world, you wouldn’t be sceptical at all.  You would see prices rising for your key raw materials, and you would ask your CFO for some extra cash to build more inventory.  You would know that a rising oil, or iron, or other commodity price will soon push up the prices for your products.

And your CFO would agree, as would the CFOs of all the companies that you supply down the value chain.

So for the last 6 months, everyone who buys oil or other commodity-related products has been busy building as much inventory as they could afford.  In turn, of course, this has made it appear that demand has suddenly begun to recover.  At last, it seems, the “synchronised global recovery” has arrived.

Except, of course, that it hasn’t.  The hedge funds didn’t buy 15 days-worth of oil to use it.  They bought it to speculate, with the OPEC-Russia deal providing the essential “story” to support their buying binge.

THE RISE IN COMMODITY PRICES, AND “APPARENT DEMAND”, IS LIKELY COMING TO AN END
What happens next is, of course, the critical issue.  As we suggested in this month’s pH Report:

“This phenomenon of customers buying forward in advance of oil-price rises goes back to the first Arab Oil Crisis in 1973 – 1974. And yet every time it happens, the industry persuades itself “this time is different”, and that consumers are indeed simply buying to fill real demand. With Brent prices having nearly reached our $75/bbl target, we fear reality will dawn once again when prices stop rising.”

Forecasting, as the humorist Mark Twain noted, “is difficult, particularly about the future”.  But hedge funds aren’t known for being long-term players.  And with refinery maintenance season coming up in March, when oil demand takes a seasonal dip, it would be no surprise if they start to sell off some of their 1.4bn barrels.

No doubt many will also go short again, whilst going long the US$, as they did up to June.

In turn, “apparent demand” will then go into a decline as companies destock all down the value chain, and the US$ will rally again.  By Q3, current optimism over the “synchronised global recovery” will have disappeared.  And Stanley Fischer’s insight will have been proved right, once again.

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Oil heads back below $30/bbl as hedge funds give up on OPEC

WTI Jul17Those who cannot remember the past are condemned to repeat it“. George Santayana

9 months ago, it must have seemed such a good idea.  Ed Morse of Citi and other oil market analysts were calling the hedge funds with a sure-fire winning strategy, as the Wall Street Journal reported in May:

“Dozens of hedge-fund managers and oil traders attended a series of closed-door meetings in recent months with OPEC leaders—the first of their kind, according to Ed Morse, Citigroup Inc.’s global head of commodities research, who helped organize some of the events.

“Group officials made the case for how supply cuts from the Organization of the Petroleum Exporting Countries would reduce the global glut….  Mr. Morse of Citigroup said he arranged introductions between OPEC Secretary-General Mohammad Barkindo and the more than 100 hedge-fund managers and other oil buyers who have met with Mr. Barkindo in Washington, D.C., New York and London since October…

“After asking what OPEC planned to do to boost prices, fund managers came away impressed, Mr. Morse said, adding that some still text with the OPEC leader.”

Today, however, hype is disappearing and the reality of today’s over-supplied oil market is becoming ever more obvious.  As the International Energy Agency warned in its latest report:

“In April, total OECD stocks increased by more than the seasonal norm. For the year-to-date, they have actually grown by 360 kb/d…”Whatever it takes” might be the (OPEC) mantra, but the current form of “whatever” is not having as quick an impact as expected.

As a result, the funds are counting their losses and starting to withdraw from the market they have mis-read so badly:

  Pierre Andurand of Andurand Capital reportedly made a series of bullish bets after meeting a Saudi OPEC official in November, but saw his fund down 16% by May 5
  Once nicknamed “God” for his supposed ability to forecast the oil market, Andy Hall’s $2bn Astenbeck Capital fund lost 17% through April on bullish oil market bets

In a sign of the times, Hall has told his investors that he expects “high levels of inventories” to persist into next year. Consensus forecasts in April/May that prices would rally $10/bbl to $60/bbl have long been forgotten.

OIL MARKET FUNDAMENTALS ARE STARTING TO MATTER AGAIN
This therefore has the potential to be a big moment in the oil markets and, by extension, in the global economy.

It may well be that supply/demand fundamentals are finally starting to matter again.  If so, this will be the final Act of a drama that began around a year ago, when the young and inexperienced Mohammed bin Salman became deputy Crown Prince and then Crown Prince in Saudi Arabia:

  He abandoned veteran Oil Minister Naimi’s market-share strategy and aimed for a $50/bbl floor price for oil
  This gave US shale producers a “second chance” to drill with guaranteed profits, and they took it with both hands
  Since then, the number of US drilling rigs has more than doubled from 316 in May 2016 to 763 last week
  Even more importantly, the introduction of deep-water horizontal drilling techniques means rig productivity in key fields such as the vast Permian basin has trebled over the past 3 years from 200bbls/day to 600 bbls/day

The chart above shows what the hedge funds missed in their rush to jump on the OPEC $50/bbl price floor bandwagon.

They only focused on the weekly inventory report produced by the US Energy Information Agency (EIA). They forgot to look at the EIA’s other major report, showing US oil and product exports:

  US inventories have indeed remained stable so far this year as the blue shaded area confirms
  But US oil and product exports have continued to soar – adding nearly 1mb/day to 2016′s 4.6mb/day average
  This means that each week, an extra 6.6mbbls have been moving into export markets to compete with OPEC output
  Without these exports, US inventories would have risen by another 13%, as the green shaded area highlights
  In addition, the number of drilled but uncompleted wells – ready to produce – has risen by 10% since December

These exports and new wells are even more damaging to the OPEC/Russia pricing strategy than the inventory build:

  Half-way across the world, India’s top refiner is planning to follow China and Japan in buying US oil
  US refiners are ramping up gasoline/diesel exports, with Valero planning 1mb of storage in Mexico

As Naimi warned 2 years ago, Saudi risked being marginalised if it continued to cut production to support prices:

“Saudi Arabia cut output in the 1980s to support prices. I was responsible for production at Aramco at that time, and I saw how prices fell.  So we lost on output and on prices at the same time.”

How low oil prices will go as the market now rebalances is anyone’s guess.

But they remain in a very bearish pattern of “lower lows and lower highs”.  This suggests it will not be long before they go below last year’s $27/bbl price for Brent and $26/bbl for WTI.

 

Oil prices could halve as the speculative bubble starts to burst

US oil export Mar17The past few weeks have been a nightmare for the many hedge funds who gambled on higher oil prices. They obviously hadn’t realised that OPEC’s November quota agreement was most unlikely to lead to a major rebalancing of today’s vastly over-supplied market.  But as I suggested in December:

The simple fact is that the arrival of US shale production means OPEC are no longer the swing producer, able to control the world market. The quotas will have little effect in themselves, as most of the participants will cheat.  Instead, they will simply help to boost US oil and gas production, whilst turbo-charging the use of smart meters.”

Now the funds are finally starting to bail out of their positions.  As John Kemp of Reuters reported this week under the headline Hedge funds rush for exit after oil trade becomes crowded:

Hedge funds cut their bullish bets on oil by the largest amount on record in the week to March 14, according to the latest data published by regulators and exchanges. Hedge funds and other money managers cut their combined net long position in the three main futures and options contracts linked to Brent and WTI by a record 153 million barrels in just seven days.  The reduction in the net long position coincided with the sharp fall in oil prices, which started on March 8 and continued through March 14.

“Before the recent sell off, hedge fund managers had boosted their net long position in Brent and WTI by 530 million barrels between the middle of November and the middle of February.  Funds amassed a record 1.05 billion barrels of long positions, while short positions were cut to just 102 million barrels, the smallest number since oil prices started slumping in 2014. But large concentrations of hedge fund positions, and an imbalance between the long and short sides of the market, often precede a sharp reversal in oil prices.

Another sign of the hedge funds’ problem is that even after this sell-off, ThomsonReuters data shows their net position on WTI is still higher than in early August 2014 – just before the price collapse from $105/bbl began.  Or as Bloomberg noted:

The value of long positions for Brent and West Texas Intermediate crude, the global and U.S. benchmarks, reached a combined $56 billion on Feb. 23“.

$56bn is an awful lot of oil to have to try and sell in a falling market.  And of course, the hedge funds are well behind savvy traders such as Vitol and TOTAL, who have been selling their barrels of stored oil for some time.

Already, WTI prices are back at the $48/bbl level seen at the end of November, before the rally began.  Equally important is that the contango in the futures market has collapsed – with prices for May 2018 now just $0.30/bbl higher than for May this year.  $0.30c/bbl won’t pay insurance and storage costs for a year, so all that stored oil will now have to be sold, as quickly as possible.

US Permian Mar17US SHALE OIL OUTPUT IS RAMPING UP VERY QUICKLY
The funds, and many observers, have simply failed to recognise that the structure of the US shale oil market has completely changed in the past 2 years.  As I discussed 18 months ago under the heading, Oil price forecasts based on myths, not proper analysis, each well no longer has to be redrilled every few months, .

Today, the Permian Basin in Texas/New Mexico has become the showpiece field for modern shale production.  Latest EIA data shows its production next month is forecast to be 2.3mbd, nearly half of total shale production of 5mbd.  It also has almost of a third of the 5443 ‘Drilled but Uncompleted” wells, now waiting to produce oil and gas in the major shale fields.  And as the chart above shows:

   Its oil production per rig has more than doubled over the past 2 years due to horizontal drilling
   Each rig now produces 662 bbls/day compared to 288 bbls/day in March 2015
   Since May last year, the number of rigs in operation has more than doubled – from only 137 to 300 last month
   As each rig normally takes 6 – 9 months to finish its work, the major expansion of production is still to come

EM Permian Mar17

Unsurprisingly, major oil producers are heavily invested in the field, with ExxonMobil having just spent $5.6bn to buy 3.4bn bbls of oil equivalent reserves. As the Forbes chart shows, EM’s cash operating cost was already less than $10/bbl last year.   And EM now plans to more than double its rigs in the Basin to 25 after the investment closes.

Of course geopolitical events, such as a US bombing of N Korea, could change these dynamics overnight.

But anyone still gambling on higher oil prices and a rapid rebalancing of the market, probably has a very nasty shock ahead of them.  The simple fact is that not only are US inventories at near-record levels but, as the top chart shows, the US is now also exporting 5mbd of crude and oil products – and this volume is rising month by month.

It would be no surprise at all, if prices fell back to their median level since 1861 of $23/bbl in the next few months. And they might have to go even lower, temporarily, as many producers happily hedged themselves at $50/bbl for the rest of this year, when the speculative bubble was at its height.

Oil markets enter the “post-fact economy”, where details of supply/demand no longer seem to matter

WTI Oct16Once upon a time, oil markets were based on facts.  Producers and consumers focused on trying to understand what “would” happen”, whilst the speculators placed their bets on what “could” happen.

In those days – even 20 years ago, as the chart shows – the role of the speculators on the futures markets was very small.  They were often wealthy individuals who liked gambling against the professionals.  And since the professionals tended to “group-think”, a contrarian view could sometimes provide big profits at the industry’s expense.

Today, however, the world has turned around 180 degrees.  Free money from the central banks has destroyed markets’ role of price discovery.  Instead, speculation rules and the fundamentals of supply/demand no longer seem to matter on a day-to-day basis:

  So far this year, trading in just the WTI futures contract has averaged nearly 10x physical volume
  And these aren’t individuals betting their own money as a hobby
  The main volume is from hedge funds with deep pockets – who aim to earn their bonus at the end of the year

IEA Oct16

The difference in approach can be seen with reference to the above chart from the International Energy Agency.  It shows the truly dramatic increase in OECD inventories over the past 2 years – at a time when the IEA calculate that OPEC oil production has been steadily climbing to reach “an all-time high” of 33.6mbd.

High inventories and record OPEC production levels would not have been a recipe for price rises in the past, especially when the IEA add that:

The lower price environment has also forced companies big and small to cut costs and do more with less. As a result, non-OPEC supply is expected to return to growth next year.”

WTI Oct16aBut this is not the world in which we are living today.  The hedge funds have free cash from the central banks, and it is getting close to bonus time at year-end.  So they need a “story” that will create enough volatility for them to make a profit.  And as the 3rd chart shows (of speculative purchases on the futures market), they have found one in the idea that OPEC and Russia will agree a deal to bring the oil market back into balance:

  In just 2 weeks, they have bought 100 million barrels of oil (a contract is 1000 bbls) – more than daily production
  They have also been busy buying gasoline, even though we are now well beyond the end of the US driving season
  The result has been that oil prices have jumped by $6/bbl – despite OECD inventories and OPEC production being at record highs

The issue is that the hedge funds are operating in a parallel universe where financial flows, not product flows, rule.

They don’t care whether the oil market is long or short, or whether there is really any chance of OPEC agreeing substantial output cuts.  Nor do they have any interest in speculating whether OPEC and Russia might agree a deal.  That is not their business, and not how they make money.

They are paid simply to take free cash from the US Federal Reserve, and to invest it where they can make the most money, as quickly as possible.  In terms of the oil market, they are therefore part of the “post-fact economy”, where the details of supply and demand, and inventories, simply don’t matter.  If they can make $6/bbl in 2 weeks on borrowed money, why should they care?

Whether the rest of us should care is another issue.

The answer depends on whether one worries about what might happen when the hedge funds decide the party is over, and move on to a new hunting ground:

  In the past, policymakers would certainly have cared.  As former Fed Chairman, William McChesney Martin, used to argue, the Fed’s job was ”to take away the punch bowl just as the party gets going”
  But they too, now live in the “post-fact economy”, and believe “the world is different this time” because they are able to print electronic money

Oil markets are therefore living in the world of the South Sea Bubble, the Dutch Tulip Mania and the Mississippi Company, where speculation is allowed to rule.  These rallies are fun whilst they last for those riding the wave, but you don’t want to be on the wrong side when the party ends.