Publications: Notes at the Margin

November Massacre (November 29, 2021)


Optimistic oil traders—those believing oil was headed above $100 per barrel—were slaughtered on November 26. It was the second end of November massacre of long oil speculators in seven years. The first occurred on about the same date in 2014 when OPEC countries defied expectations and attacked American independent oil producers. As Ryan Dezember reminded readers, “Friday’s selloff was reminiscent of Black Friday seven years ago, when the Organization of the Petroleum Exporting Countries opened its spigots and initiated a price war from which U.S. shale drillers have yet to fully recover.”[1]


On this occasion, cash WTI dropped by $10.24 per barrel. Seven years ago, the decline was smaller. Cash WTI fell $7.70. Ironically, the settlements were not that far apart. Oil settled at $68.15 in futures markets Friday. Seven years ago, it settled at $66.15. Exactly two dollars separate the price levels.


Both the 2014 and 2021 price declines were associated with fears of supply and demand imbalances. OPEC’s unexpected (by some) refusal to cut production in 2014 created a disparity that spread fear among oil traders. The 2021 price plunge resulted from the news that a new, potentially more virulent form of Covid?19 could depress economic activity and oil consumption.

[1] Ryan Dezember, “Oil Price Slumps on Fears of New Covid-19 Restrictions,” The Wall Street Journal, November 26, 2021 [].


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