The only certainty an oil industry observer can bank on right now is that no one understands the markets. The extreme end of globalization has introduced so many variables that market analysts can no longer effectively predict the non-linear ripples. Right now is a case in point. We have a clean cut dividing line between key markets analysis, with those who fear a banking failure contagion threatening oil demand, and those who say there is no systemic catastrophe and oil will be bulldozing its way back to $100 in no time. Neither narrative can catch oil prices, however, which have had an extremely volatile couple of weeks. Just over two weeks ago, oil prices crashed as fears of contagion following the sudden collapse of Silicon Valley Bank (SVB) and signature bank. That was followed by the share crash at Credit Suisse, which suggested that the initial failures with small, regional U.S. banks perhaps had a global financial crisis aspect. By the week of March 20th, oil prices were clawing back some of those losses, and by the week of March 27th, we saw a major rally (on Monday, the 27th, alone, oil prices gained ~5%). Still, oil rests in the $77 range for Brent and the $72 range for WTI. This, recession fears, and what to expect from Chinese oil demand, rule the key narratives that are so divided on what oil prices will look like for the rest of this year, and beyond. The bulls’ camp includes Goldman Sachs, Barclays and ING. While all three have cut their oil price forecasts for this year after crude lost 10% two weeks ago, their target prices for this year run from $80-$96 per barrel. For the bulls, it’s all about China right now, and they are fairly confident that commodities markets will be spared from the banking sector’s problems. They don’t see this as a financial crisis along the lines of 2008-2009. While Goldman revised its $100 oil price target to $94 in the next 12 months, and $97 next year, it’s still quite bullish. “Oil prices have plunged despite the China demand boom given banking stress, recession fears, and an exodus of investor flows,” Goldman said in a note last week, as quoted by Bloomberg. “Historically, after such scarring events, positioning and prices recover only gradually, especially long-dated prices.” But even the bulls are following the herd mentality. With their pens, big oil traders are calling an imminent oil price rally, but with their trades they are selling-off in a temporary panic because everyone else is. The bulls are betting on a long-term market rally on one hand, but on the other hand, they are taking part in the near-term sell-off. Rebecca Babin, a senior energy trader at CIBC Private Wealth, explained it to Bloomberg like this: Traders “can still have a bullish thesis but realize surviving the next month is mission critical. Many investors are in survival mode here.” So, they’re all rushing for the exits while predicting a bright future for oil prices, and the herd mentality takes over for all animals. NB: I BUY PANIC ANS SELL EUPHORIA Another way to interpret this is that no one really has a handle on what oil prices will look like for the rest of this year, and to be safe, they’re all playing it bearish in the immediate term. Ed Moya, OANDA senior market analyst, calls the nature of this market “Jekyll and Hyde”, warning in a podcast cited by SP Global on Monday that while he was optimistic that oil would be spared from the banking crisis, the market could turn on a dime. Again, it’s another way of saying we find it impossible to hedge our bets on oil prices. NN: I buy fear especially when its fucking bankers running around like a chicken with its head cut off…. this is just the start…..BlackMask Pod Cast: