A Big Reason the Price of Oil is FallingMost people focus on the supply of oil and oil demand and the relationship to inventories.
While all of this is important there are other things going on to affect the oil price.
1....oil prices are quoted in US dollars and so when the value of the US dollar goes up relative to other currencies, the price of oil goes down. Right now the US dollar is at a 20 year high relative to the Euro (currently at par). There are expectations that the US could go up even more relative to the Euro since the US Fed plans to hike interest rates another 75 basis points whereas recession fears in Europe arising from the energy situation vis a vis Russia will limit the ECB from following the US Fed's lead. If this were to happen the price of oil will fall even further.
2....the oil futures market is currently in severe backwardation which means that oil traders rather than paying to store oil and sell it at a higher price later are dumping their oil inventories because they can get a better price now as opposed to the future. This selling lowers the price of oil.
The good news in all of this is that both of these factors will auto correct over time and so a weakness in the SP of oil producers caused by these factors presents a buying opportunity. This is, in part, why I have started buying oil stocks in a slow but methodical way. It is also why I am doing the same by buying euros with my US dollar holdings in a similar slow way.