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Originally Posted by _______
I have posted so many times trying to correct this meme that will not die about weak demand causing the drop in oil that I should just give up.
But...one more time.
The world will use more oil in 2016 than it did in 2015. Just as it used more oil while prices dropped throughout 2015 than it did in 2014. The issue isn't demand. It has never been demand.
You can blame pricing weakness on the success of American capitalism capsizing cartel pricing. Smart guys figured out technologies (fracking and horizontal drilling) to extract oil from shale. We have a legal system where mineral rights are held privately and can be sold or leased by the owner. The result of that is the US now has the largest reserves of recoverable oil in the world.
My bet (no one should pay attention to this as no one here has been more wrong about oil than me) is that prices will be near $60 next January.
The late summer downturn in prices is cyclical.
I can be very wrong about the direction of prices. But the fact of growing demand is irrefutable.
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but if supply exceeds the growth in demand then you have falling prices. Rigs are more efficient now then they have ever been and we get more from each hole, need less holes to satisfy demand. The rig count needs to drop because we can simply do more with less.
