Brent oil collapsed 6% overnight to $56.78 as I write. There is no particular reason for it. All of the reasons pointed out here for months, really:
- US shale resilience at $60
- global oversupply and an imminent Iran deal
- China weakness
- strong US dollar
And, like iron ore, the recovery was largely built on a traders arbitrage that is now breaking so the unraveling is swift. Some technicals from Soc Gen give us a lead on how low we’ll go: