Oil below 50, above 55, now at 53.... is the crisis over?

ON the 20th of November, a friend wrote: "20th September does not seem that far away, and 50$/barrel seemed at that date way beyond the horizon, and in 2 little months, here we are, below 50$/barrel. I have quite a few discussions based on your thoughts, and we are going through yet another weekend of semi panic....Keep me on you mailing list, and I will keep having a look at your blog. Thanks for your insights !!"

Since then, oil made a 10% jump to $55 in one day and is now, as far as I can see, trading at around $53.

The question arises: are we now past the worst, considering that I had said oil at $50 was one sign of the bottom?

Well, we may be at or near the bottom but sadlywe are certainly not on our way up. Expect volatility (and you can even make money on it) but do not expect any sustained rally at present.

You may recollect that I had actually given two signs, the first was oild at $50 - but that was only one sign. The second was whether the governments of the world (specifically at the last G20 conference) were going to start tackling the fundamental issues facing the world economy (as outlined, for example, in my Open Letter to President-elect Obama, which also available on this Blog).

The G20 meeting did nothing significant, even though it made some encouraging noises, and may yet produce some surprises.

However, I see no signs right now that any government is prepared to act on any of the key issues. What I see are governments trying to restore consumption so that the unreal balloon can continue inflating.

If the current attempts succeed, they will simply lead to another bubble - which will be great fun for the playiers involved in that bubble, but will simply lead to a worse global crash in a short while. Sphere: Related Content