The world still has too much oil.
China’s crashing stock market and the meltdown in the metals market may be getting all the attention lately, but crude oil is quietly crumbling once again. Oil has plunged nearly 20% this month alone and it briefly dipped below $47 a barrel on Tuesday. That leaves it flirting with the March lows, which was the weakest price since 2009.
The latest selling has been fueled by the same dynamics that caused oil to tumble from $100 last summer. The American energy revolution has created a massive supply glut and the tepid global economy is depressing demand growth.
The good news for American drivers is industry insiders expect these dynamics to persist, keeping energy prices cheap for some time. Thousands of U.S. gas stations will have sub-$2 gasoline prices by December, according to Tom Kloza, chief oil analyst at the Oil Price Information Service.