Oliver’s Insights – The plunging oil price – why and what it means
Oil prices have fallen more than 50% over the last year driven largely by a surge in supply relative to demand.
· Further weakness to around $US40/barrel is likely to be necessary to bring forth supply restraint.
· While lower oil prices are negative for energy producers and this has been weighing on share markets, ultimately it will be positive for growth in industrial countries, Asia and Australia and this should help drive share markets higher by year end.
· The fall in petrol prices flowing from lower oil prices has so far cut the average Australian household’s petrol bill by around $14 a week.