Oil May Drop Under $20 In The Short-Term, But What Is Its Price Floor?
In practice, there is no bottom to how low oil prices can drop: as Canada's Bank of Montreal calculated over the weekend, as a result of an unsustainable supply-demand balance "something has to give", and for that to happen oil may drop to $25, $20 or even $15, as some aggressive put buyers are speculating. This is what the Canadian bank said:
We believe that the weakness in crude oil prices reflects a combination of fundamental factors and financial flows. Fundamentally there is simply too much oil.