[Sam Gamgee]

This is awesome. The first good explanation I have read. I was all caught up on the demand side, seeing falling oil prices as a function of the fact the world hasn’t emerged from the global recession. But what we have is roughly an extra 6 million barrels (approx.) per day since 2008.

One wonders how this caught everyone off guard, which it obviously did with the massive volatility in oil prices.

[thackney]

the world hasn’t emerged from the global recession. But what we have is roughly an extra 6 million barrels (approx.) per day since 2008.

Global demand for continued to climb for oil in the same time period. In the past year or so, it slowed down the growth rate relative to the supply growth rate, but they both were climbing since then.

Look at the Production and Consumption Balance chart at:

SHORT-TERM ENERGY OUTLOOK, Global Petroleum and Other Liquids
http://www.eia.gov/forecasts/steo/report/global_oil.cfm