I believe the market is vastly underestimating the possibility of oil prices declining in a fashion similar to the latter half of 2008.
My reasoning for this has absolutely nothing to do with looking at inventory levels, or really any other kind of fundamental data. Rather, instead of looking directly at oil data, it’s worth looking at what’s going on with substitutes to oil.
Take a look below at the price ratio of the Guggenheim Solar ETF (NYSEArca: TAN) relative to the iShares S&P 500 (NYSEArca: IVV).
As a reminder, a rising price ratio means the numerator/TAN is outperforming (up more/down less) the denominator/IVV. Note that this is a relative way of looking at markets. The numerator can go down, but so long as it goes down by less than the denominator, the price ratio trends higher. The same is true in reverse.