Experts predict oil oversupply is correcting

Oil drilling operations in west Texas|Getty Images

Oil drilling operations in west Texas|Getty Images

John Kilduff, the founding partner of Again Capital, believes that the fall in U.S. crude oil production which took place in the past few weeks can be a sign that the market is finally beginning to correct.

Related: Oil prices have hope as supply & demand try to find market equilibrium

Since Saudi Arabia’s conducted OPEC decision to compete for market share against U.S. producers, rather than support the prices, all eyes have been on the U.S. drillers. Experts believe that by standing firm, OPEC is pressuring North American drillers to make the first production cuts to stabilize the oversupplied market.


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The recent boom that took place in the oil production industry and the oversupplied market has been motivated by the North American shale oil and gas revolution.

In a recent interview with CNBC, Kilduff mentioned that the oil prices are likely to fall into the $20s, but he is now less confident that the oil prices can dip below $30. He quotes government data that hints the U.S. production has fallen below 9.1 million barrels per day from the high average of 9.6 million BPD. He states that the U.S. oil production industry is beginning to correct and is currently happening.

Goldman Sachs has also predicted that oil production is likely to fall into the $20s. Additionally, Stephen Schork, the editor of Schork Report said that prices can dip below $30.

EI Creative cropThe experts believe that the prices of oil production are likely to continue to decline after the banks are finished with an assessment of companies’ balance sheets and determining their role in the recent fall.

Related: Kings of Crude: US vs OPEC

The liquidity crunch on the supply side will be compounded by economic reduction among BRICs nations, G-7 countries and the Asian tigers, he said.

It is also believed that the supply will continue to last with the demand. Schork states that the oil prices can be a contributing factor to the financial crisis and dip to be as low as $32.40.

He admits that if we can get down to that low, then we can ultimately break the $30 barrel between the present times and the fourth quarter.


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