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Reasons Oil Prices Will Surge by 2016


Though the price of oil has reached historic lows over the past year, some analysts believe that a price recovery may be on its way. One such expert anticipates that oil prices could go up to as much as $70 a barrel.

Demand Remains Strong in the Global Market

Though oil is presently in high supply, it also remains in high demand. Major purchasers such as China are building their oil and gas stores, which will undoubtedly improve prices over time. As many countries are moving to purchase oil while the price is depressed, demand will continue to increase beyond the current price points.

Price Fixing Attempts Will Wane

OPEC has attempted to control gas industry prices by flooding the market with cheap oil, thereby reducing their own competition by making it difficult for domestic oil producers to continue their work. However, this strategy only works as long as members of OPEC continue to be able to sell at these rock bottom process. Once OPEC raises their prices, the rest of the world will follow.

An Industry Hard at Work

Apart from global factors, analysts also point to the oil companies themselves as a reason for increased per barrel prices. Many oil and gas companies have been innovating to discover new and more efficient ways to reclaim oil, ultimately leading to companies that have more control over their revenue streams. As companies are able to take increased charge of production, they will also be able to weather the storms of lower prices.

Investors Are Waiting for a Call to Action

Strong demand and strong supply creates a desirable market regardless of the price ramifications. Investors will need very little to convince them that the oil market is where their dollars should be spent. During this speculative time, many investors are waiting to see how the gas prices develop. Once they start improving, it’s likely that investing will pick up.

The Worst Is Already Over

The market has already experienced a significant crash in price, leaving companies to improve themselves if they are to survive. Consequently, the businesses which have remained have drastically improved their operations, and will be better and stronger when meeting other challenges in the future. Companies have protected themselves against future market issues and have taken action to further develop their equipment and procedures.

Though the recent drops in oil price have been extreme, there is no reason to believe they are permanent or will even be long-lasting. Lower oil prices have been caused by outside pressures in addition to a radical change in the way and speed with which oil can be reclaimed. As the market continues to normalize, it’s likely that the oil and gas industry will come back stronger than it was before, and that prices will once again begin rising.