It’s been a wild ride for crude oil prices so far this year.
After tumbling to a more than decade low in February, prices, whether for WTI or Brent, near doubled in the next four months.
Recently, they’ve have been moving lower, albeit in typically wild fashion. From the highs of June, they’ve fallen by more than 20%, entering a technical bear market.
There have been any number of reasons cited to explain the sudden reversal lower — an increase in US oil rigs entering production, weaker than expected global demand and profit-taking from investors — just to name three.
However, as shown in the chart below from Goldman Sachs, supply disruptions in major oil producing nations — planned or otherwise — have also played a role, particularly the enormous wildfires in Canada that disrupted oil sand production.
And here’s the chart of US WTI front month crude futures over the same period. It comes as no surprise that the peak in disruptions also marked the recent high in prices. As disruptions have eased, so too have prices.