If it isn’t tapped here, it’s tapped there. If it isn’t one prosperous well, it’s another. As long as it’s available and plentiful, oil will always be the subject of man’s intense efforts to exploit it.

It’s been this way for well over a century, since the first commercial footings in crude oil production in the mid 19th century; there’s a certainty in the fact that oil will be drilled and in demand, even in the face of the ‘peak oil’ concept.

And yet, that same certitude in production across the globe continues to breed uncertainty in today’s oil markets.

Crude oil prices continues to fluctuate. So many peaks and – more pertinently – troughs have been seen in crude oil pricing since the price per barrel first began to plummet in summer 2014, that it has been difficult to peg any firm expectations on the market’s outlook. Policymakers and producers alike have been troubled by plundered prices that once were steady at $115 per barrel, but now struggle to show any consistency around $50 per barrel. These are choppy trading waters for the oil business – and oil and water famously don’t mix.

The erratic trading in crude oil pricing last week provoked yet more concern for this unsettled business. Prices rose around 1% on Friday on the back of a weaker US dollar, while a slight semblance of confidence had returned to the market earlier in the week amidst suggestions of future action to dampen an OPEC price war and stabilise prices. Hope had also been derived from an 8% drop in China’s oil output last month (July), as well as the gradual signs of recovery that have been seen in recent months.

But every relative upturn in the market seems to be met with an air of caution – or worse – to match. Caution also emerged last week of slowing demand next year, potentially driving the value of an over-supplied market further downward.

Digging deep

Such turbulent times have meant those involved in the oil business in any capacity have had to dig deep over the last 18 months.

Consumption for gas companies that serve customers near the wellhead has been ‘hurting’ according to one analyst I spoke to, who estimated that, “Gas companies that rely on drilling and completion activities in the heart of producing regions are off 20%.” In contrast, gas that is used in production and downstream activities are typically more stable, in line with trends in overall oil and gas production, which generally vary much less from one year to the next.

“Growth in US tight oil output has been rapid in the last several years, resulting from a high level of upstream activity and improvements in upstream technology that have made production economical in several major unconventional plays,” he explained. “In addition, energy intensive industries are performing very well with the low oil prices, which is really benefiting gas companies that serve these markets. For example, methanol plants, ethylene crackers, fertiliser plants, and storage facilities for coal, gas and oil all are benefiting from low natural-gas prices.”

Clearly, it’s a case of the farther from the wellhead the better.

Buy the influence is still inescapable for all involved. Major industrial gas companies like Air Liquide and The Linde Group are comparatively far from the wellhead, but have still noticeably felt the impact of a sluggish oil market on their respective engineering activities.

The latter was the first to warn against these negative effects, announcing in December 2015 that it had adjusted its medium-term targets for 2017 due to substantially changed conditions since those targets were defined; a significant factor being a reduced contribution from the group’s oil-affected Engineering Division. For Air Liquide, a stark slump (almost halved) in first-half 2016 revenues for its Engineering and Construction division was attributed to the slowdown in major projects related to energy and the low number of new projects – all of which are almost inextricably linked to the crash in oil prices.

Oil price crash

The nadir

So is there an end in sight – have we reached the nadir now in global oil prices?

As I understand it, many in the sector simply don’t know what might unfold in the near-term. In my conversation with an analyst, he told me his experience of speaking with participants in the oil space himself was that no-one really knows what the near-term is going to bring. All of which does little to arrest investment hesitancy.

“It looks and feels like we might have hit the low point, but we also thought that was the case a year ago,” he said. “We still hold firm with our assessment that oil prices will continue to be very choppy, but upward over the long-term.”

This concurs with the general acceptance at large; that prices will recover and see an upward trend over the long-term. After all, blips may come and go but oil is usually a sure thing. The evidence is there, however, to suggest that this particular blip could prevail and grow deeper still.

Despite rallies in pricing last week, reports suggest that a weaker economic outlook ahead means demand for oil in 2017 is likely to grow at a slower rate than this year. That’s according to the International Energy Agency (IEA), which estimates global demand for oil will grow by 1.2 million barrels per day (bpd) in 2017, down from 1.4 million bpd this year. This represents a cut of 100,000 bpd from the IEA’s forecast last month. Coupled with well-documented increasing supply, and there is a distinct possibility that prices could plunge further.

It seems the well of this particular story is clearly yet to run dry. Uncertainty remains the only certainty in the global oil business, for now.