The biggest surprise to me is that OPEC are not supporting the prices. Previously they'd have set a floor level below which they wouldnt let the price drop, controlling the effect with a simple economics demand and supply ploy to manipulate the market by taking production offline, creating a flow shortage and hiking the price back up. Classic cartel steps, which its been doing since the 1960's - at that time there was very little leverage, so it was truly monopolistic.
I monitor the global plastics prices which are driven partly through the commodities markets but oil obviously has a big influence. Happy days for me that prices are falling (although FX, labour and overheads are going the other way and GDP is fluctuating wildly in previously stable economies which takes the bullishness out of the markets)
The recent statement from OPEC Sec Gen recently that they'll let the market determine the price and will ebb and low production with it is unheard of !!! This was partly on the back of a lower than expected growth prediction in particular Asia demand and the fact that the world is actually becoming more energy efficient and that renewables are starting to be credible - ergo demand for crude drops and they need to react otherwise their industry is overgeared and becomes too debt burdened.
But the other element outside of OPEC is that the USA are starting to provide a lot of oil from shale production methods and thats "flooding" the market and leading to an oversupply situation. For my money I think OPEC will probably continue to let the price fall until that US production becomes uneconomic and the power shifts back to the Middle East and they can exhibit a little control again. Either way it looks like good news for the motorist with forecourt predictions at £1 per litre in the not too distant future and we can all drive around on full boost all of the time
Calendar
