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Oil Price Set To Ease Further As Supply Outstrips Demand

News that the demand for oil is being outstripped by the supply of oil has been welcomed by not only business around the world but many under fire governments. After peaking at $147 a barrel the price has now dropped back to around the $114 level and there are some who feel it will fall further in the short term.

While demand from many of the emerging economies, which had pushed the price ahead, is now slowing and has fallen to around 86.9 million barrels a day, supply has increased to just short of 88 million barrels a day. The International Energy Agency (IEA) is of the opinion that oil will come under further pressure in short term and the gap between demand and supply will widen. Contrary to popular belief the supply of oil to the markets is not simply a case of turning a tap on and off, it takes time and preparation.

The only problem that may arise in the short term is yet more conflict in places such as Iraq, Iran, Nigeria and Georgia which have the potential to push prices to higher levels. However, there does seem to have been something of a sea change in the market over the last few weeks and the tide seems to be turning.

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