One of those being the oil industry which hasn't found long term resolve between producers from opposite ends of the competitive line. Although we've seen a staggering rally in prices this year, much of the move can be put down on the flexibility of US shale gas producers and considerable supply interruption from OPEC members.
What appears to be a stable market is gradually propelling existing producers in the US with halted production wells to have the propensity to turn open taps once again due to the lofty price levels being traded on market.
I recall observing the chart below a few weeks back and saying the disconnect between the price and US production was too large to believe a sustainability in the short term stating higher prices would coax suppliers back into the market. This pattern has been confirmed in the bottoming of operating US rigs increasing since May 2016.
To determine how willing producers are to start up production will become dependent on the level of support oil prices have at current prices. If we were to see a falter in demand it would immediately stop additional supply being brought to market however if demand continue to gobble up the leftover glut the International Energy Agency says exists fresh production could consolidate prices.
If the Brexit drama is anything to go by I think its safe to say politicians won't be affording attention to ensuring growth returns to the world economy but rather on saving an inevitably broken economic union from collapse. In order for oil to support current prices it needs consistent economic growth which isn't likely to occur anytime soon an in saying this I expect the vulnerability of oil prices to increase and pressure to mount until an eventual drop.
Crude falls as U.S. drilling rigs increase to most since April https://t.co/6A9RywBAmV pic.twitter.com/wpZbbZA3Ax— Bloomberg Markets (@markets) July 11, 2016
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