Reflection - Assignment Example

Oil Supply and Demand affiliations Oil Supply and Demand This paper examines the levels of demand and supply of oil as illustrated in the wall street journal found on the link http://www.wsj.com/articles/eia-global-oil-supply-to-outpace-demand-in-2015-1421173344 The world is experiencing excess supply of oil as the prices of oil bottomed to a price of $54.58 a barrel from a high of $93.26 in 2014. Contrary to what is expected of a price decrease, the global oil demand decreased and supply increased due to government predictions of future declines in the prices throughout the year and into 2016 (Friedman, 2015).

The supply is higher than the demand due to the release of past stockpiles by the energy companies that expected prices to go higher over the years while ignoring the price decrease. In normal circumstances, the prices fall resulting in a decline in supply and an increase in demand. However, the prices of oil declined, and demand decreased while supply increased. The predictions by the government for a further decline in prices have resulted in the maintenance of the equilibrium demand by customers expecting the prices to decrease further.

Energy companies want to release as much oil and its product at the current price to avoid doing so when the prices decrease further. At the moment, the forecast for future price decreases is influencing the behavior of the supply and demand of oil prices. The steady and firm dollar has also affected the demand for oil. Oil prices get measured in dollar terms, and the currency has been stable making the decrease in prices ineffective in most countries where the dollar rates supersede the change.

The increased supply has also happened due to the change in technology that allows oil companies access supplies in the trapped shale-oil fields. ReferenceFriedman, N. (2015). EIA: Global Oil Supply to Outpace Demand in 2015. The Wall Street Journal. Retrieved from http://www.wsj.com/articles/eia-global-oil-supply-to-outpace- demand-in-2015-1421173344