Forget the glut, as oil prices enter irrational territory

London

WORLD oil markets quietly breached an important barrier as they crashed nearly 30 per cent to below US$30 a barrel in the opening weeks of 2016, crossing the fuzzy line separating a rational response to fundamentals from an irrational fear where the only way forward is down, down, down.

In the futures markets of New York and London, momentum-driven algorithmic traders and big hedge funds drive oil prices far beyond the point that even once-bearish analysts say is justified - at least in the medium-term - by supply and demand.