Why there's too much oil

An unstable market is not good for the industry that supplies it. A volatile market is endurable; an unstable one is not. The difference between these market characteristics has been suggested here before (OGJ, Jan. 11, 1999, p. 23). A volatile market changes rapidly. An unstable market inclines toward upset. By these terms, the oil market is unstable because it tends to create excess supply. To some extent this is beneficial. A market for something as important as petroleum must resist supply interruption, which is why reliable suppliers pay money to hold oil in inventory. It is also why the capacity to produce crude oil usually exceeds demand, which in turn is why ...

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