A month ago the International Energy Agency (IEA) began hedging its bet that declining oil prices would cut production: “U.S. supply [of crude oil] so far shows precious little sign of slowing down. Quite to the contrary, it continues to defy expectations.”

This is how economists say “Oops!”

On Friday the IEA was still astonished at the resilience of the oil industry as it continued to produce at record levels, despite predictions that declining rig counts would force production cuts. Instead, total U.S. crude oil production hit a high of 9.4 million barrels a day during the week ending March 6.

Others are predicting that eventually there will be no place to store the surplus oil. At present, over 70 percent of available crude-oil storage capacity is being used, raising questions about where to put the oil if production doesn’t begin declining soon.

The free market is providing the answers to these and other questions, with the price of crude oil on Friday (for April delivery on the New York Mercantile Exchange) touching the lowest price since January 28. Expectations were that oil, which dropped from over $100 a barrel late last year, would bottom out somewhere around $55 a barrel, and then begin slowly inching its way back up. For about 30 days, that prediction seemed to be accurate.

FK – Or maybe they’re expecting to burn a lot more in a coming war…

They don’t do anything for ‘our’ benefit.