The Real Reason For the Oil Crash… And Why It Could Happen In Other Asset Classes

It looks like Oil’s bounce is over.
Traders have been playing for a rise in Oil based on two things:
1)   Oil being sharply oversold due to its 60% collapse in the span of six months.
2)   We’re heading into “drive season” (the summer) in which gas demand increases.
This has seen Oil surge 45% since its March 2015 bottom.
However, the larger story for Oil, like all things, concerns the US Dollar. Below is a chart showing Oil against an inverted chart of the US Dollar chart (so if the US Dollar strengthens, the blue line falls).
You can note the close correlation between the two:

It is not coincidence that Oil bottomed the very same day that the Us Dollar peaked and began to correct. Oil exploration is an extremely capital intensive business: drilling a new Oil well costs at a minimum ~$4 million… and can easily run up into the $100+ million range.  (more)

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