Oil Traders Learn That Boilerplate In Their Prospectuses Applies To Them, Too

Oyl Vey.

A problem.

Pretty much every single piece of paper printed on Wall Street includes the words, “past results do not guarantee a future outcome.” For the past 290 or so trading sessions, oil traders have steadfastly refused to believe that this applied to them. This is apparently changing.

U.S. crude dipped past $40 in intraday trading Friday afternoon for the first time since 2009, and that’s about where the similarities stop. Back then, oil’s sharp plunge ended within about six months. This crude collapse just finished its 14th.

The new course has been punishing for many investors who bet on a quick recovery this spring. But the pain they’re feeling — and that oil producers around the world are feeling — is actually quite normal, according to researchers at the Houston investment bank Tudor, Pickering, Holt & Co. Oversupplied commodity markets, like oil right now, don’t usually recover in a matter of a few months, but usually over several quarters….

More investors, analysts and researchers have been coming to that realization in recent weeks. Many who had predicted a rebound for late this year, now say one is unlikely before the second half of next year or 2017.

The Financial Crisis Didn’t Prepare Oil Traders for This… [WSJ MoneyBeat blog]