No End in Sight for Oil Market Woes

Tuesday, October 13, 2015

Tough times continue in the oil market. With prices having dropped once again to below $47 per barrel, after briefly jumping 3% as a conclusive overreaction, estimates show price per barrel to dip well into the thirties, even.

Though there was a surge in prices in the early spring, this was mostly the product of over optimism. Thanks to oversupply, projections in the oil market continue to be bearish as prices continue the freefall witnessed throughout most of 2015.

And the market correction is not projected to correct itself anytime soon. Oil demand is projected to slow not only throughout the remainder of 2015, but well into 2016 as well. This follows more than a decade of market flooding thanks to newly tapped resources made available through hydro-fracking.

Hydro-fracking reignited the relatively dormant Midwestern US oil market, throwing a life preserver to the American economy. Not only did it bust open a brand new domestic revenue stream, the newly-tapped resource provided an immense number of jobs to laborers everywhere from North Dakota to southern Texas. Unfortunately, the new source simultaneously saturated the market with oversupply.

The most pressing issue currently is the market is in a state of imbalance. There is so much more supply than demand, a glut of oil is slowly draining off with consistent, albeit not rising, use. The omnipresent oversupply continues to plague the oil market and investors having depended on reliable returns in recent years.