The retreat of 'peak oil'

Washington

THE recent meeting of the Organization of the Petroleum Exporting Countries (Opec) provides an opportunity to understand the mysteries of the global oil market. As expected, Opec decided not to cut its oil production. Barring unanticipated developments, prices will drop, says oil analyst Larry Goldstein. Potential oil supply, including drawdowns from bloated inventories, exceeds demand. Mr Goldstein rightly cautions, however, that no one knows where prices will settle.

Oil's dramatic price changes seem baffling. In mid-2014, crude prices averaged around US$100 a barrel; now, they're gyrating between US$50 and US$60. Over the same period, US petrol prices have dipped from more than US$3.50 a gallon to around US$2.50. With the world economy slowly recovering, why have prices collapsed?