Most analysts seem to agree that daily demand for oil is short of average daily production of a little over 94 million barrels per day by just about 1.5 million barrels. The Bank for International Settlement (BIS), in a recent note 4 has said that the steepness of the price decline and very large day-to-day price changes are reminiscent of a financial asset.
The Organization of the Petroleum Exporting Countries (OPEC) decision not to cut production, no doubt, has been a key factor in the fall in international crude price. But, as the BIS study shows, other factors could have exacerbated the fall in oil prices. One important factor could be the substantial increase in debt borne by the oil sector in recent years.