Insana: Oil In Secular Decline

The recent rally in oil prices doesn't mean that it is in a new bull market. Rather, the asset is in a state of secular decline, according to a commentary by Ron Insana for CNBC. "Despite all the talk of a production freeze among Saudi Arabia, Russia, Qatar and Venezuela, there are still serious about whether or not other OPEC, like Iran, will go along. So far, the short answer is no," Insana said. Insana said the recent 20 percent recovery off the bear market low looks quite small on any crude oil chart and noted that oil prices have not been in a bear market for two years, they've been in a bear market for almost eight years. Oil reached its peak in July 2008 at $145 per barrel and the secondary peak occurred in 2014 when prices had rebounded to $107 per barrel. Since then, prices have plummeted more than 70 percent. Insana noted that the oil is in a state of "secular decline" and demand for oil will come down due to cheaper alternatives such as natural gas and electric cars. "While there may be more upside, I believe that oil is in a state of secular decline, both because of the over-abundance of supply and the very real possibility that demand for oil will continue to contract, and not just for economic reasons alone," Insana said. "New technologies, whose advancement may stall amid very cheap oil, are still very real. Whether it is electric and/or hybrid cars, autos that are increasingly more fuel efficient, growing competition from natural gas to power not just utilities, but also vehicles, and you have the makings of a commodity that is dying," Insana added.