The markets infatuation with crude oil is fascinating. The media appear confused as to why oil is declining, like it is all so bizarre. As the world came out of a global recession, it was clear there will be no recovery without cheaper oil prices. It just so happens that oil producing countries in the middle east have central bank reserves full of US dollars. All it took was the FED declaring an end to money printing and a promise of rate hikes. The stronger US dollar would bolster the coffers of these countries and they don't have to sell their oil for much to realize a healthy reserve. It is no secret more efficient producers can get the oil out of the ground for under $6. Today, rates have risen, so the promise is now reality. The US dollar remains strong and will likely maintain value into 2016. This will certainly cast a shadow on oil prices.
The other more recent problem affecting oil, is the one surrounding Islamic State. The US will likely want to reduce revenue generated by ISIS through oil fields held in the Middle East. According to Russia, this is an estimated $94m every month. It is so obvious that not even tension between Iran and the Saudis could cause a rebound in oil. Iran is also back in the supply fold and is likely flooding the market with oil. In 2016 supply is likely to erode weak global demand. Let's not also forget oil prices historically are very low in economic expansionary phases.
Technically, oil futures are not showing any love for the upside with unconvincing buy side volume on the lows and very aggressive signs of supply. On both fundamental and technical points, oil is set to continue its decline. I preference $20 a barrel but the 1985 lows of $11 a barrel are a possibility but I guess most people where in high school or kindergarten when Oil was at those lows. That said, we are staring at the bottom, the final sell off. I say wait for the buy side.