Oil Massacre Continues
Daniel Drew, 12/8/2014
Oil prices continued their unholy descent by dropping almost $3 per barrel today, a decline of over 4%. Oil closed at $63.03. The catalyst was a report that Morgan Stanley cut its 2015 forecast for Brent crude from $98 to $70.
XLE, the energy sector, followed oil by also closing down 4%. Oil is now down 40% from the 52 week high, and XLE is down 24% from the 52 week high.
Since Morgan Stanley was drastically wrong about their original forecast, their latest forecast should not be taken seriously. Since everybody is trying to catch the bottom in oil right now, the market is simply following the principle that it will cause the most pain to the most people. This is what happened after the October 2008 crash when people were bottom fishing the S&P; 500. The real bottom was still 5 months away.
Oil has been in decline for months. It caught the oil billionaires T. Boone Pickens and Harold Hamm off guard.