Bottoming out: the fragile recovery of the oil market

The good news is that the fundamentals should start to improve. But speculation abounds that oil could get caught in the wider market downdraft

For anyone in the industry the numbers barely need restating. Brent, now down almost 75% since mid-2014, suddenly looks as likely to test $20 a barrel as it does to begin a recovery. Fear of a lasting depression has gripped the industry. Saudi Arabia is battening down the hatches, adjusting its economy to cope with a prolonged slump. BP boss Bob Dudley, who has been sacking North Sea workers with abandon, says things look a lot like 1986. Talk to hard-pressed oilmen in Alberta, home to the world’s third-largest trove of oil but also its highest-cost barrel, and the gloom is contagious. Some producers in the oil sands, where wellhead prices struggle to reach $12/b, are running at a deep loss.