Why we are likely to see an extreme upward rebound in the oil price

We are nearly two years on from Saudi Arabia’s decision to cast off its traditional role as the central banker to the oil industry. That decision has led to a significant overproduction of oil and the collapse of the oil price from a high of $115 in June 2014 to below $30 a barrel last month. The oil price has recently bounced and is currently trading around $37 but there seems little chance of a significant near-term rise in the oil price. However, next year we could see a extreme rebound in oil prices as necessary investments in future oil production continue to be deferred.

Before that happens though the oil price needs to bottom out and find some stability. This should happen later this year as supply continues to fall in response to the low oil price. Until that happens Saudi Arabia and it closest allies the UAE and Kuwait are unlikely to reduce oil production. They want to see marginal producers out of the market and the only way that can happen is if oil prices continue to stay low.

http://energyandcarbon.com/why-we-are-likely-to-see-an-extreme-upward-rebound-in-the-oil-price/