$ 22 Oil remains a Real Possibility

Back on February 10, 2015, almost a year ago we outlined in this blog why Oil could decline to $ 22.  We revisited that projection on October 13, 2015.  Today Oil is back on the front page.

Yes we still believe Oil could go down to $ 22 but that is not the real story for Oil stocks.   The real story is that oil could trade  between $ 22 and $ 36 for the next few years and the real killer is that means the Oil companies will need to figure our how to live with a $ 29 average when it is said that $ 40 is break even on operations.

What is driving this, a lot of obvious things like Fracking and Saudi Arabia trying to break Iran, but the real driver for low prices is Central Bank monetary policies around the world.  An excess of cheap money increases the supply of goods.  If the FED eventually wants inflation, then they should embrace Normalcy, and bring monetary aggregates back to balance.