The same thing that happened to the housing market in 2000 to 2006 has happened to the oil market from 2009 to 2014, contends well-known trader Rob Raymond of RCH Energy. And he believes that just as we witnessed the popping of the housing bubble, we are in the midst of the popping of the energy bubble.
"It's the outcome of a zero interest rate policy from the Federal Reserve. What's happened from 2009 to 2014 is, the energy industry has outspent its cash flow by $350 billion to go drill all these wells, and create this supply 'miracle,' if you will, in the United States," Raymond said Thursday on CNBC's "Futures Now."
"The issue with this has become, what were houses in Florida and Arizona in 2000 to 2006 became oil wells in North Dakota and Texas in 2009 to 2014, and most of that was funded in the high-yield market and by private equity."
And now that a barrel of West Texas Intermediate crude oil has fallen from $100 to $60 in five months, those energy producers are in trouble.
"The popping of the credit bubble in the energy industry as a result of the downside volatility in oil is likely to result in a collapse of the U.S. rig count," Raymond said. "From a longer-term standpoint, what it does is it really impairs the industry's ability to invest capital."
That said, when it comes to the price of a barrel of oil itself, Raymond expects to see a rebound once U.S. production dries up.
"We live in a $90 to $100 world," he said. "We just don't live in it today."
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