Can the oil price fall?

As crude starts to bite, I have noticed that governments are under pressure to act. We are hearing noises France or even the US releasing strategic reserves and also Saudi Arabia standing by to increase production. 

 

Are we on the verge of a $15-20bl price correction?

-          No
      Governments actions are contrarian indicators when they sell: looking at history, the US government has stopped filling strategic reserves in April 2006 and 2008, two years when crude oil defied seasonality and kept going up for the quarter. However, when they fill reserves, they are doing so at turning points. They filed in January2007 and 2009, at the bottom.

-         
m   Yes
      Saudi Arabia, Mexico and Russia are the most accurate forecasters of oil price moves, with a forecast error of 9.3% over 13 years, while PhD heavy IEA is the worst forecaster (23% forecast error). See here: http://www.rolandberger.com/media/press/releases/Roland_Berger_analysis_of_oil_price_forecasters.html

Yes
After a mild winter, inventories are rather high and should limit additional demand. 

Conclusion

As Saudi Arabia steps up to avoid demand destruction, it seems that a small correction is on the card over the next few weeks.

This should help consumer discretionary sector shares.
This would be invalidated by further Iran-Israel developments.