Investing

Is Oil Below $40 Unusual?

Is Oil Below $40 Unusual?

Is Oil Below $40 Unusual?

Zoe Team

2 min read

A financial advisor reviewing a plan with two clients at a table

Key Takeaways

Key Takeaways

  • Oil price volatility is often compared to the unpredictability of roller coasters.

  • Falling oil prices impact global economies and energy-focused investment strategies.

  • Long-term market perspective is needed rather than reacting to short-term cyclical dips.

Frequently Asked Questions

Frequently Asked Questions

Are low oil prices unusual?

While surprising, price fluctuations are a cyclical part of the energy market similar to the ups and downs of a roller coaster.

What factors affect oil prices?

Prices are influenced by global supply, demand, geopolitical factors, and shifts in energy-consuming industries.

How should investors view oil dips?

Investors are encouraged to remain patient and focus on long-term trends rather than reacting to the emotional highs and lows of the market.

When I was a kid, I used to love roller coasters. I might be exaggerating, but I think my brothers and I rode Kumba in Bush Gardens, Florida 12 times straight. Fast forward, and a few weeks back I went to Hershey Park in Pennsylvania with my own family. My kids had a great time. I would highly recommend it if you have kids under 10. When we were there I saw the below roller coaster.

It’s one loop. One loop for crying out loud and I got nauseous just looking at it. So, what happened to me? Well, I just don’t like that type of entertainment anymore (I have enough of that with two young kids and starting a business).

Similarly, the world is freaking out because Oil fell -20% from recent peaks, even though, when you look at rolling six-month periods over the last 30 years, we experienced a 20% oil drop 14% of the time. Meaning, it’s not THAT uncommon.

So why does it FEEL so much worse? Well, over the last year, oil has been trading within a tight $12 range. We have a short memory and basically forgot what volatility feels like. So, when we get on the kiddy roller coaster we now feel nausea.

Is $40 oil that unusual?

I also hear conversations of “the horror” it would be if Oil were to break below $40. Hold the phone, is oil below $40 that abnormal? If we take into consideration historical oil prices from the 1970s onwards (before OPEC existed) and we adjust for inflation, Oil has been below $40, 40% of the time. Now I am not saying that oil will fall below $40 next week, I don’t have a crystal ball, but it would not be that infrequent.

Data Source: Macrotrends, Zoe Financial

That leaves a lingering question. What IS a very low price historically speaking? When inflation is adjusted, oil has only traded below $21, 5% of the time over the last 47 years. You might say, “We live in a different world than the ‘70, ‘80s, ‘90s so it’s not an apples to apples comparison.” Ok, fine, if we look at the last three-year rolling average oil prices, a two standard deviation move (meaning that there is only a 5% chance of occurring) would bring the price down to..drum roll please..$21. Oil at $21, now THAT would be a story.

When I was a kid, I used to love roller coasters. I might be exaggerating, but I think my brothers and I rode Kumba in Bush Gardens, Florida 12 times straight. Fast forward, and a few weeks back I went to Hershey Park in Pennsylvania with my own family. My kids had a great time. I would highly recommend it if you have kids under 10. When we were there I saw the below roller coaster.

It’s one loop. One loop for crying out loud and I got nauseous just looking at it. So, what happened to me? Well, I just don’t like that type of entertainment anymore (I have enough of that with two young kids and starting a business).

Similarly, the world is freaking out because Oil fell -20% from recent peaks, even though, when you look at rolling six-month periods over the last 30 years, we experienced a 20% oil drop 14% of the time. Meaning, it’s not THAT uncommon.

So why does it FEEL so much worse? Well, over the last year, oil has been trading within a tight $12 range. We have a short memory and basically forgot what volatility feels like. So, when we get on the kiddy roller coaster we now feel nausea.

Is $40 oil that unusual?

I also hear conversations of “the horror” it would be if Oil were to break below $40. Hold the phone, is oil below $40 that abnormal? If we take into consideration historical oil prices from the 1970s onwards (before OPEC existed) and we adjust for inflation, Oil has been below $40, 40% of the time. Now I am not saying that oil will fall below $40 next week, I don’t have a crystal ball, but it would not be that infrequent.

Data Source: Macrotrends, Zoe Financial

That leaves a lingering question. What IS a very low price historically speaking? When inflation is adjusted, oil has only traded below $21, 5% of the time over the last 47 years. You might say, “We live in a different world than the ‘70, ‘80s, ‘90s so it’s not an apples to apples comparison.” Ok, fine, if we look at the last three-year rolling average oil prices, a two standard deviation move (meaning that there is only a 5% chance of occurring) would bring the price down to..drum roll please..$21. Oil at $21, now THAT would be a story.

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Disclosure: This page is not investment advice and should not be relied on for such advice or as a substitute for consultation with professional accounting, tax, legal or financial advisors. The observations of industry trends should not be read as recommendations for stocks or sectors.


Investment advisory services are provided by Zoe Financial, Inc. (Zoe Financial), an investment adviser registered with the U.S. Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training. Learn more about Zoe Financial on the SEC’s Investment Adviser Public Disclosure website. Brokerage services are provided by Zoe Securities LLC and Apex Clearing Corporation, members of the Financial Industry Regulatory Authority Inc. (FINRA) and Securities Investor Protection Corporation (SIPC). Learn more about Zoe Securities and Apex on FINRA’s BrokerCheck website.

The information in the visuals above is for illustrative purposes only and does not represent an actual user's account, balance, or return. Zoe Financial does not provide tax or legal advice.

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Disclosure: This page is not investment advice and should not be relied on for such advice or as a substitute for consultation with professional accounting, tax, legal or financial advisors. The observations of industry trends should not be read as recommendations for stocks or sectors.


Investment advisory services are provided by Zoe Financial, Inc. (Zoe Financial), an investment adviser registered with the U.S. Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training. Learn more about Zoe Financial on the SEC’s Investment Adviser Public Disclosure website. Brokerage services are provided by Zoe Securities LLC and Apex Clearing Corporation, members of the Financial Industry Regulatory Authority Inc. (FINRA) and Securities Investor Protection Corporation (SIPC). Learn more about Zoe Securities and Apex on FINRA’s BrokerCheck website.

The information in the visuals above is for illustrative purposes only and does not represent an actual user's account, balance, or return. Zoe Financial does not provide tax or legal advice.

Explore the Zoe Wealth Platform with AI

Some of this content may have been generated with the assistance of AI. Please review and sense-check all outputs, as AI tools can occasionally produce incomplete or inaccurate information.
In certain situations, you may be required to disclose that the content was “generated by AI.” Please confirm any specific disclosure or labelling requirements with Compliance.

(646) 680-9244

support@zoefin.com

666 Third Ave, 6th Floor
New York, NY, 10017

Copyright © 2026 Zoe Financial, Inc. | All rights reserved

Disclosure: This page is not investment advice and should not be relied on for such advice or as a substitute for consultation with professional accounting, tax, legal or financial advisors. The observations of industry trends should not be read as recommendations for stocks or sectors.


Investment advisory services are provided by Zoe Financial, Inc. (Zoe Financial), an investment adviser registered with the U.S. Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training. Learn more about Zoe Financial on the SEC’s Investment Adviser Public Disclosure website. Brokerage services are provided by Zoe Securities LLC and Apex Clearing Corporation, members of the Financial Industry Regulatory Authority Inc. (FINRA) and Securities Investor Protection Corporation (SIPC). Learn more about Zoe Securities and Apex on FINRA’s BrokerCheck website.

The information in the visuals above is for illustrative purposes only and does not represent an actual user's account, balance, or return. Zoe Financial does not provide tax or legal advice.

Explore the Zoe Wealth Platform with AI

Some of this content may have been generated with the assistance of AI. Please review and sense-check all outputs, as AI tools can occasionally produce incomplete or inaccurate information.
In certain situations, you may be required to disclose that the content was “generated by AI.” Please confirm any specific disclosure or labelling requirements with Compliance.

(646) 680-9244

support@zoefin.com

666 Third Ave, 6th Floor
New York, NY, 10017

Copyright © 2025 Zoe Financial, Inc. | All rights reserved