Why This Oil Price Rally Won’t Last

Every price rally of 2019 has ended in tears. The latest will probably end similarly. It is based on hope that ending the U.S. – China trade war might improve the economy and oil demand. It is also based on belief that yet another OPEC+ production cut will make a difference. In other words, it is based on sentiment. WTI prices began increasing in early October from a low of $52.31 and reached $61.22 on December 19 (Figure 1). $52 was one standard deviation less than the WTI mean for the last 15 months. Each price rally of 2019 began within…