Don’t expect oil prices to rise next year. As a matter of fact, they may fall. The International Energy Agency (IEA), in its monthly forecast for August, laid out a case for greater supply, which will face enough demand so that the oil price trend will not be alleviated:

From the driller in the Bakken to the motorist at the pump, oil market players are adjusting to a world of lower prices. Our latest forecast shows stronger-than-anticipated demand and non-OPEC supply growth swinging into contraction next year. While a rebalancing has clearly begun, the process is likely to be prolonged as a supply overhang is expected to persist through 2016 – suggesting global inventories will pile up further.

OPEC traditionally controls the world’s supply, and to some extent sets prices. Its leverage has dropped, and will continue to do so:

But OPEC only accounts for a bit more than half of the annual increase in world oil supply. While non-OPEC output growth has sunk from its heights of 2014, supply in July was still running 1.2 mb/d on a year earlier thanks to hefty investment made previously

However, OPEC’s activity cannot be discounted, particularly as nations and large oil companies outside the organization may find oil prices too low to keep up exploration

Part of the trigger is not just oil but refinery activity:

Global refinery runs reached a record 80.6 mb/d in July, 3.2 mb/d up on a year earlier, but fissures are showing. High distillate stocks have pushed cracks in Singapore down to their lowest level since 2009 and prompted run cuts in Asia. Elsewhere, especially in the US, still-soaring gasoline cracks supported high margins and throughput.

In sum, oil prices are more likely to sit at $50 than race back to $100.

ALSO READ: OPEC’s Oil Price War Not Working Out So Well — for OPEC

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