Oil industry response to price - it takes time but is real

Prices are still the best medicine for solving problems of supply and demand; however, the link between a price move and the impact on supply and demand is not always clear or immediate. In the case of oil, higher prices have led to more rigs being employed. Higher prices will lead to higher inventories. Demand will fall when prices are higher as users ration. US rig usage is the highest in decades. The same applies to inventories. The response is not always immediate as capital decisions take time, but the eventual impact is and will be clear, prices will fall.