It's pretty obvious what is happening. Everyone with the ability to do so is opening the taps, it is a classic price war. We see the same thing happen with all sort of products, even fruit.
Grab/hold your buying market, knock out the competition. When the dust settles prices will be higher. That's the typical pattern. In this case I don't think prices will necessarily be higher than before the price war, but I'm sure they will be a lot higher than where they are now, and I'm fairly sure the war will not last beyond this year, and could possibly end within a couple of months or so, especially if there is another catalyst (active conflict in the middle east, terrorism at a major pipeline/refinery/storage facility, etc).
Arguably, this price war has caused most producers to produce as fast as they possibly can, especially the mid/low cost producers. Consequently, I doubt the world will ever see production higher than it is now, and possibly never again quite this high.
I expect that before cushing is completely full and WTI absolutely collapses (whether or not that would actually happen), the US government will allow exports. Oil is already cheap, and the US government won't want to kill its own oil industry.
More and more I am suspecting that we have already seen the bottom, but even if it's ahead of us I don't think the rebound is too far ahead.
SEA Price at posting:
53.5¢ Sentiment: Buy Disclosure: Held
