Why is Oil Down?

Why is oil down today?

The simplistic yet realistic answer is that oil should be down!  OPEC is pumping a bit more, but basically the fundamentals and metrics have not changed and it is always about unknown risks.  Now that there is a better understanding of the situations, one would expect the price to move southward.

One tends to think that oil most always over-reacts to circumstantial change.  The differential between Brent and crude prices going to Europe over the last couple of weeks was between $2 and $5 per barrell.  With the futures market being driven by heart and the spot market driven by mind, oil above $105 is too rich and must come back under current scenarios.

According to WTI in Cushing, OK, the U.S. has more than enough supply and is predicting a softer driving season this summer (down 5-7%).  It looks like oil could come back to around $90 a barrell.