Oil prices started to recover on Monday as investors await reports on the state of US oil inventories, which are expected to show an increased demand in the domestic oil market. Another factor which can play a role, according to market analysts is the fall of active oil rigs. Rig count fell dramatically over the last few months compared to last year’s rig count, which may have impact on oil prices in the following months; sudden price jumps are not expected, and oil prices are the lowest for years and the current price can barely cover extraction expenses. There’s also an increased world oil production in countries such as Libya, Iraq and Saudi Arabia. Indeed, some OPEC member states increased the rig count in an attempt to diminish impact of low price per barrel on their oil export income. This decision pushed the oil price even lower.

oil storageEven in the long term oil prices are not expected to rise dramatically. Recent agreement Iran made with six world superpowers led to lifting all UN sanctions, including the oil embargo. Massive exports of oil from Iran are expected to start by Q2 of 2016. Assuming their huge crude reserves along with Iran government’s thirst for hard currency after years of export sanctions, mass exports will be certain, which should keep the price low.

The Islamic State, a large area spanning from Eastern Syria to western and northern Iraq, under control of insurgents, which once was a nuisance and threat for oil production in Iraq has stopped advancing beyond the points they reached in the first few months of the year. This made extraction more certain and Iraq can finally make long-run oil production plans.

Another factor which can keep oil price low is uncertain demand growth. European economy is on the edge of a recession, due to inability to effectively cope with Greek debt. Fiscal crisis in Greece can thus expand to major European states which would stop the previously weak EU growth. This can only be avoided if a long term agreement between Greece and its creditors can be reached which may take months.

There are also news that Canadian economy can be receding, which can also make their oil demand fall a bit or stagnate.

As fall approaches, oil prices may begin to recover for a little while thanks to increased oil heat demand. Usage of heating oil, however, remains relatively low as many households use other heating methods such as electricity and natural gas. This can now change, since heating oil is expected to be the cheapest fuel option for home heating.