A few days ago, Barclays, the English investment bank, said they believe in a possible collapse of raw materials in 2016 specifically oil. This collapse would include both oil prices and precious metals.
The cause of this belief can be identified in the willingness of investors to liquidate their short-term gains, closing their purchasing positions. The increase in raw material prices is only speculative then.
During the formation of a speculative bubble, in fact, the sustained growth in the price level is not supported by the real economy and this could be difficult in time, being unable to sustain the uptrend.
In addition, the danger of a race to the profits, which would see a rapid succession of exits from the market by investors, will be the results of a price collapse. At that point, oil prices would make for their real value.
According to Barclays, raw materials have become short-term investments, losing in the last few months the role of safe haven assets through which they protect themselves from inflation and time.
To rebut this argument, here we are Rystad Energy, the Norwegian consulting company. It announced that production levels will fall into negative in 2016 for the first time in years, and this will push upward the price of oil. This could be the new bullish driver bullish for oil prices.
In fact, it was the collapse in oil prices of recent months to cause the cancellation of projects for the construction of new sites.
According to the analysis of the Norwegian company, existing installations will lose about 3.3 million barrels of daily production this year, while the new facilities will add only 3 million barrels a day. Without taking into account the growing demand for oil that could absorb most of oversupply by the end of 2016.
According to the latest Credit Suisse analysis, the price of oil is on course to reach 50 dollars a barrel by the end of May. The determining factor for the higher black gold prices would be its demand.
‘The question is not as subdued as many analysts believe and the price of oil will be able to rise again thanks to the good performance of the worldwide demand’.
The fear that had spread among analysts worldwide about a possible collapse of oil prices, however, seems to begin to take shape.
If we think of the oil performance on Tuesday, March 29, we might think that the investment bank is right. On the day of the reopening after Easter holidays, the black gold has recorded a major -3%, for the second consecutive day.
After a staggering 45% increase in oil prices since the middle of last month, the fears of investors and of those who believed in a speculative drive seem to realize.
If it really is the end of a race for price oil, we cannot say; what is certain is that investors will watch with great apprehension at the upcoming meeting of oil producing countries scheduled for April 17.