The recent fall in oil prices is due to a combination of weakening demand and an increase in supply, particularly from the United States where technological advancements in fracking and drilling have enabled the cost-effective production of oil and natural gas from previously unrecoverable reserves. This technological revolution is still underestimated by many, but with break even costs of extraction falling, it is unlikely that prices will recover quickly. The new normal for oil prices is likely to be a medium term recovery, but prices staying below US$80 per barrel. This has significant implications for companies and the global energy market.
