Base on the world economic review and studies shows that there are basic reasons why oil prices in global aspect keep on falling.
Less Demand, More Oil.
The oil price is partly determined by actual supply and demand, and partly by expectation. Demand for energy is closely related to economic activity. Then, over the last year, demand for oil in places like Europe and Asia, suddenly began weakening due to slowdowns in China and Germany . US began tapering off, due to weakening economies, new efficiency measures and a growing switch away from oil to other fuels. Turmoil in Iraq and Libya, two big oil producers with nearly 4m barrels a day combined has not affected their output. Both Iraq and Russia announced that they were exporting more oil than ever, and prices slumped even further. One reason gas prices are falling is a growing supply of oil on the market, driven in part by the battle between the United States and Saudi Arabia, a massive producer of oil.
The kingdom appears to be taking a long-term bet by continuing to supply the market with oil, rather than cutting back production. America has become the world’s largest oil producer, oil production has increased every year since 2008, which has contributed to a growing world supply. Though it does not export crude oil, it now imports much less, creating a lot of spare supply. The United States, once the world’s biggest oil consumer, has seen gasoline consumption stagnate as cars became more fuel efficient. More broadly, oil demand has been flat lining in lots of places around the world looking for more fuel efficient technology and alternatives.
Nature and Technology
High prices spurred companies in the US and Canada to start drilling for new, hard-to-extract crude in North Dakota’s shale formations and Alberta’s oil sands.