Monday, September 21, 2015

The oil market is continuing to struggle with no end in sight. With the price per barrel having dropped under $50 by nearly $10 since the end of the summer driving season—pre-Labor Day—the market keeps getting hit. And with factors at play continuing to diminish market returns, there is no expected relief anytime soon.

With the summer driving season long gone, there isn’t even this component keeping the market cushioned. The market is flooded with supply thanks to increased reserves, especially from US supply. US producers have nearly doubled output since the fracking boom in the early 2000’s. But some believe there is no coincidence US supply is driving down profitability in markets around the globe.

Some speculators are bearish on the oil market until aggressions in the Middle East have been quelled or completely alleviated. This is theory is primarily thanks to speculation the markets are being intentionally flooded to prevent funding to militant groups. This after evidence suggests oil profits from Iraqi and Saudi wells are being funneled to militant and extremist groups, such as ISIS.

According to a recent article released by the Wall Street Journal, most investment banks don’t see the price of crude creeping over the $60 per barrel mark until the end of 2016. But if what many theorists are insisting, and our economy isn’t quite as capitalist as we may think, conditions in the market could remain this way for the long haul. Think about it this way; we may see peace in the Middle East before we see any profitability in oil futures.

TAGGED AS:

• free market
• oil market
• oil price drop
• unrest in middle east