An oil price crash typically throws up familiar comparisons with 1986, 1998 and 2008. In all these 3 periods, oil had corrected for a fairly long time but had managed to subsequently bounce to new highs. The 2009 oil price crash was caused by the global slowdown post the Lehman crisis. The 1998 oil price crash eventually led to the Russian default. The 1986 oil price crash was, perhaps, similar to the current situation as that too was caused by oversupply coming in from Latin America. The question is whether this time around oil will bounce back to its highs? Or, will it remain at depressed levels indicating a new normal for oil pricing? There are sufficient indications in the oil market to suggest that we could be seeing the beginning of a new normal in oil prices. Continue reading
