Oil prices slip to seven-year lowOil prices slip to seven-year lowhttps://www.recenter.tamu.edu/news/newstalk-texas/?Item=114152015-12-08T06:00:00Z2015-12-08T18:00:00Z

​FORT WORTH – With OPEC's decision to keep pumping at current levels, analysts expect oil to remain relatively cheap well into 2016 and maybe longer. Supply and demand are out of sync, where the supply is robust and the demand is lackluster.

The price of a barrel of West Texas Intermediate crude dipped below $37 on the Nymex, hitting a seven-year low. Energy stocks, from giants Exxon and Chevron down to independent producers, took a beating as well. Although this is good news for consumers and industries that rely on fuel, oil producers are feeling the heat as thousands of workers in the oil patch have been laid off. 

​U.S. oil production rose from five million barrels a day in 2008 to an estimated 9.3 million barrels a day this year. That surge, coupled with OPEC's unwillingness to cut production, saturated the oil market and, subsequently, sank prices. Supply is outpacing the 1.4 million barrel-a-day demand, according to Judith Dwarkin, chief economist at ITG Investment Research.

Additionally, economic growth has been slower than expected. China's economy has slowed, Japan is in recession, and Europe is struggling. Although the American economy is growing, fuel-efficient cars have blunted the need for oil. 

The government predicts that U.S. production will drop 6 percent next year.

"It could take well into 2017 to work off the surplus inventory," said Dwarkin.

Fort Worth Star-Telegram
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