Through this September, global demand for crude oil will exceed global supply by nearly 1 million barrels per day, according to the International Energy Agency, a Paris based think tank that monitors oil trends. This is nearly a 3 million barrel swing in crude oil supply from November 2014 when supply exceeded demand by more than 2 million barrels per day, creating a glut in the global oil market, followed by a downturn in the industry like no other.

It was on that fateful Thanksgiving day, November the 26 that the OPEC Cartel made the decision to not cut production to bring supply and demand in line and keep prices at the then current levels of near $100 per barrel. It was OPEC’s decision to let the market find its balance by itself without interference of the Cartel, which was the norm in brining prices in line. Everyone for himself……fighting for market share, which was a definite change in policy.

The Saudis and other Cartel members had watched the U.S. grow its crude oil production from 5 million barrels a day to 9.7 million and soon to be over 10 million in just a matter of 7 years. Without question this sudden growth in production had an impact on global oil supply markets. The one drawback for U.S. producers was that their cost per barrel was higher. So when it came to a fight for market share the higher cost crude was going to be the loser.

The fight for market share was on. The price for crude oil in June of 2014 was $114 per barrel, falling to a low of $27. The Saudis with their low finding-cost per barrel started producing at full capacity as well as other OPEC members. Each country for themselves, fighting for their market share and setting a new record for the OPEC Cartel of 33.39 million barrels per day. The Saudis, Kuwait and Arab Emirates were in lockstep against other competitors Russia, Iraq, Iran and the U.S., which all, including the U.S., export oil.

The U.S. higher cost oil took the greatest hit with production declining from 9.7 million barrels to 8.7 million barrels along with a major decline in the U.S. and global oil and gas industry. A decline that has not been seen since the crash of the mid 80s. Over 250,000 jobs, 90 publicly traded companies in bankruptcy or in financial restructuring. It is predicted that 1/3 of the global publicly held companies will go into some form of financial restructuring by the end of this year.

The light at the end of the tunnel is that oil supply and demand are coming in line, which is essential for the market to heal. Recovery will take time due to the fact there is a great deal of crude oil inventory around the world that will find its way into the market. It won’t happen overnight. However, the IEA report saying that crude oil “balances show essentially no oversupply during the second half of the year,” this is good news for the industry.