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Business

Oil prices are back in a slump

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Business

Oil prices are back in a slump

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COMING UP:Oil prices are back in a slump

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00:00:01
>> Just when it appeared safe to jump back into the oil patch, a stealth slump catching Wall Street off guard. Crude oil prices sliding 15% in July, in the biggest monthly tumble in a year. The free fall is driving oil back down into the $40 range and into the dark grips of a bear market.
00:00:20
The culprit? Too much optimism. Reuters' energy editor, David Geffen.>> We hit $50 a barrel back in June. And then since then what's happened is that we've seen companies start to bring rigs back online. There's always this big, big competition for market share from the different parts of the shale regions in the United States to Saudi Arabia and other parts of the world.
00:00:45
And when there's a surge in demand, or at least a surge in prices, they react, and they say we've gotta get that share, and then if they all react at once, we see what's happening now.>> The result, barrels of oil just sitting with nowhere to go as supplies outstrip what has been relatively healthy demand.
00:01:03
And now there are doubts about how much demand is out there at the much weaker than expected US economic growth last quarter. All this means, more pain for oil companies still pining for the good old days of $100 oil.>> We've so far seen quite a few reports from the energy companies where they're just not all that great.
00:01:22
They're pretty pessimistic, to be honest. Chevron and Exxon were both out with reports today, each of them had their problems.>> But Wall Street is betting things won't get much worse. A new Reuters' poll predicting an average crude oil price of $44 a barrel by the end of the year.
00:01:38
That's nearly $3 higher than today's price.