Oil Continues Down Its Slippery Slope: Where's The Bottom?

 By Mike Patton

A fundamental shift is underway in the energy complex. The price of oil, as measured by West Texas Light Sweet Crude, has fallen from its most recent high near $107 per barrel in late June of last year, to a current level under $47.
This represents a decline in excess of 55%. What’s causing this most precious commodity to plummet? Perhaps more importantly, where’s the bottom of the barrel for crude? In this article, we’ll look at a the factors behind the slide and explore a more clandestine point of view.
On August 25, 2014, the 50 day exponential moving average on oil fell below the 200 day moving average, marking what technical analysts refer to as thedeath cross. This was approximately the point at which oil began its descent. While there are sometimes false readings with this indicator, this time it was real as oil was reacting to a number of events. At the crux of the issue is an abundance of supply relative to weak demand.
Prior to the decline, U.S. oil production was in full swing as fracking was greatly contributing to the economic rebound. States like Texas and Oklahoma and even North Dakota were reaping tremendous financial benefits from the oil boom as prices held firm. However, given oil’s current slide, the economies of these states are likely to be hit, and hit hard, if prices don’t rebound soon. But is this realistic?
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