The year 2015 has been pretty big when it comes to the oil market. During this time, we witnessed the prices of oil being slashed in half in merely six months. At the moment oil prices are unsustainably low and over the long-term, if prices continue to stay this low, many oil companies may be forced to close their doors, which could lead to a price rise. The big question is, how much will the rise be and when will this happen?  It’s hard to determine this, but here are some current events that are impacting oil prices in the US today.

oil storage

Supply and Demand

Will oil selling at super low prices urge renewed demand? In the United States, at the moment oil prices in many areas, are below $2 per gallon. That’s super low, compared to last year.

Gas prices are also down, leading to an increase in gas consumption as more people are able to afford traveling expenses. Take a look at these statistics: in 2014, when the prices started to decrease, cars in the United States consumed the highest daily rate of gasoline since 2007.  Having low prices could spark higher demand and in return, however, unfortunately, this could increase the oil prices, again.

China’s Economy

China is at the top of the list when it comes to countries who consume the most oil in the world. In fact, back in 2013, they passed the United States as the biggest importer of fuels. China’s economy will have a significant impact on oil prices.

Geopolitical Flashpoints

As you may already know, a simple supply disruption could easily cause oil prices to dramatically increase. Take Libya in 2014 as an example, they blocked oil exports and in return, this caused oil prices to increase. Let’s use Iraq as another example – ISIS took over parts of the country, causing oil prices to increase due to a lingering fear of supply outages.

Looking back in history, we find that geopolitical crises are at the top of list of the biggest short-term movers in regards to the prices of oil.

There are many variables that create an impact on the price of oil in the United States. A higher supply and demand, China’s economy and geopolitical flashpoints are three major variables to be concerned with. Yes, we are happy that the prices are low at the moment, but it is only a matter of time before we start to see an increase in oil prices – that’s not expected until 2016. Again, we don’t know when this will be, or how much – it is something that we just have to wait and see.