Crude oil is has entered a new bear market, the definition of which is when an asset class is down more than 20% from its recent high. It has been more than five years since the market fell so hard so fast from its high. Two months later, it was even lower. During the past 20 years, the S&P 500 has struggled when oil fell into a bear market.
Oil prices broke to a fresh seven-month low on June 21, with WTI dropping to $42 per barrel. The renewed and heightened pessimism over the pace of rebalancing has sunk in as O.P.E.C. struggles to reduce its inventory. U.S. shale continues to grow production. There are large volumes of supply back in the market at the worst possible time.
WTI Crude Oil Now Technically Bearish
Oil Companies Adjust To “Lower For Longer.”
The Wall Street Journal reports:
most in the oil industry are resigned to low prices for years to come, recognizing that a range of $50 to $60 might be a semi-permanent equilibrium.
Between 2014 and 2015, 105 oil producers and 120 oil-field service companies went through bankruptcy.
Conclusion
In short, these extreme price movements and key support levels can provide some fantastic opportunities to trade oil. like my last trade in SCO for a 21% move a couple weeks ago.