The Oil Price Collapse

Addressing challenges and finding opportunities

The collapse in oil prices, beginning slowly at first in July of 2014 and accelerating in earnest in late September 2014, has sent shock waves throughout the energy industry. With West Texas Intermediate crude losing more than half its value from high in 2014 of around $110/bbl, the impacts have been profound on the energy industry, but particularly so for producers who are struggling to adapt and survive in this new market reality.

The primary factors that contributed to the fall in prices - excess supply brought on in large part by the boom in U.S. production and depressed demand due to low global economic growth - have also contributed to an increase in market volatility. With no clear direction, the market is experiencing price swings not seen since 2011 as traders and speculators buy or sell in reaction to any news or events they feel may portend a sustainable recovery or a further decline.