This Telegraph article suggests that OPEC expects oil prices to come roaring back relatively soon, and when they do there are worries that the drop in investment caused by the current low prices will make it impossible to keep up with demand. And market speculation can supercharge the up swing when it comes.

Mr al-Badri said the world needs an investment blitz of $10 trillion to replace depleting oil fields and to meet extra demand of 17m barrels per day (b/d) by 2040, yet projects are being shelved at an alarming rate. A study by IHS found that investment for the years from 2015 to 2020 has been slashed by $1.8 trillion, compared to what was planned in 2014.

Mr al-Badri warned that the current glut is setting the stage for a future supply shock, with prices lurching from one extreme to another in a deranged market that is in the interests of nobody but speculators…

The paradox of the current slump is that global spare capacity is at wafer-thin levels of 2pc as Saudi Arabia pumps at will, leaving the market acutely vulnerable to any future supply-shock. “In the 1980s it was around 30pc; 10 years ago it was 8pc,” said Mr Descalzi…

By the end of this year there may be a “small deficit”. By then the world will need all of Opec’s 32m b/d supply to meet growing demand, although it will take a long time to whittle down record stocks.

So to put it in stock and flow terms, there is a big stock built up right now, and demand is less than what can physically be supplied (these are flows), so prices are low. When (if?) the global economy picks up at some point, demand may be greater than what can physically be supplied. The stock will gradually get used up, and as investors start to realize it is getting used up and supply will not be able to keep up, prices will rise, maybe fast. High prices will eventually spur investment and the cycle will repeat. This is how it plays out all other things being equal. But some of the other things are renewable energy, maybe nuclear energy, carbon credits/taxes/caps, maybe approaching physical limits on the big Middle East oil reservoirs, food and water economics, public sentiment, and geopolitics, all of which can shift the economics at the same time fossil fuel technologies and markets are going through their gyrations. Interesting times.