By now pretty much everyone knows that oil prices are incredibly low.
Currently, WTI crude - the US benchmark - is trading at around $30.60 per barrel while Brent - the international benchmark - is trading around $31.45 per barrel.
But Deutsche Bank's Jim Reid argues that if you look at the long-term trend for real-adjusted prices, then today's oil price situation isn't actually as "extreme" as most people think it is.
"A long-term real adjusted chart ... shows that the average price (in today's money) since 1861 is $47/bbl. So current levels are low but not exceptionally low relative to long-term history," he wrote in a recent note to clients.
"Overall the graph doesn't suggest that current levels are as extreme as many would suggest even if long term value has returned. The $140 prices a few years back look especially bubble like in a long-term prospective."
Here's what this chart looks like:
Deutsche Bank
"Nevertheless," Reid adds, "in this year's long-term study if prices stay at similar levels it will be the first time our long-term mean reversion exercise will show positive return expectations for oil since we first started it over a decade ago."
"Although we don't claim to be experts on oil markets our long held belief is that commodities that are factors of production are unlikely to outstrip inflation over the long-term as if they do there will be alternatives found. Clearly this can take years if not decades to resolve so even if we're correct commodity cycles can still last a long time before they eventually mean revert."