The image above is a slide from my presentation I delivered in September of 2016 at the HGS Africa Conference in Houston. The industry was at the bottom of the business slowdown and at the peak of the corporate restructuring. Everybody was worried about the oil prices, budget, and their jobs. Analysts were speculating on political and economical drivers for the oil price fluctuations. Everybody was focused on very short-term business conditions.
I think the biggest driver in oil price vulnerability is a human factor once again and people tend to overreact to the bad news. They do not take the time to take a step back and to look at a longer trend. They focus on a truncated historical record and make wrong predictions. Computers engaged in portfolio management today pick up human panic triggers and initiate an avalanche of stock sales. The result is an overcorrection of oil prices.