WTI crude prices pulled back from a critical technical level after coming within a couple of ticks of the 6258-high hit in May of 2015. Back then oil topped before a collapse in price as three bearish factors caused oil to fall.

The first was worries about the future of the European Union. Fears that a Greece exit vote would destroy the EU caused real worries. Prior to the Grexit vote Europe had shown signs of growth. Yet, that vote drove Europe back into a recession based on fear and that was the first factor that led to a sell-off. Greece, of course, voted to leave the EU in July of 2015, only to say that the vote was to stay after the Greek banks were emptied out.

Then in July of 2015 after the market tried to put the Grexit vote in perspective the Obama administration and 5 world powers agreed to lift sanctions on Iran in exchange for Iranian limits on its nuclear program.This move, oil traders thought, would just add to a global oil glut and unless demand was strong would cause tankers of oil to flood the marketplace.

Then demand fears set in. August of 2015 China devalued the yuan in a move that caused an uproar in global markets. The move zapped confidence and caused global stock markets to get hit hard leading to a crisis in confidence for oil traders feared that the Chinese oil eating dragon would stop eating. That drove oil to the $26 a barrel handle, a price level not even seen in the aftermath of the great recession. That lead to a weak end to stocks in 2015 and 2016 started with the worst start to a global stock market in history. That caused oil to hit the $26-barrel area again. That price drop caused fear and pain. We heard oil would be lower for longer. That oil would go down to $10 a barrel and shale oil producers would keep producing at any price. Oil was going to $10 a barrel and the price of oil might never rally again.

We then saw massive CapX cuts that totaled over a trillion dollars. Projects canceled. But for what?

The EU is still here and thriving, China oil demand is at or near a record high. Iran’s oil has been absorbed and the predictions of tankers of supply flooding the market never came to pass. In fact, it is possible that Iran may be hit with sanctions again.