The market is pricing in low oil prices into the foreseeable future, however, I expect to see a price increase in the second half of next calendar year as inventories clear. The oil price has fallen from well over $100 a barrel 18 months ago to be trading below $40 currently. The current low oil price is a reflection of a strong US Dollar and OPEC members trying to hold onto market share in an oversupplied market. Production has consistently run higher than consumption for over the past two years; the recent data we are seeing demonstrates production and consumption have finally converged. If this trend continues we will see the current record inventory levels start to decrease over the next few months and a strengthening oil price to ensue.
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