Oil prices are beginning to rebound thanks to a cut in production. But when companies resume drilling and supply increases again, prices might plummet for the second time this year.
Oil prices are unsustainably low right now--many high-cost oil producers and oil-producing regions are currently operating in the red. That may work in the short-term, but over the medium and long-term, companies will be forced out of the market, precipitating a price rise. The big question is when they will rise, and by how much.
If oil prices stay at $65 per barrel for three years, 40 percent of all energy junk bonds could be looking at default, according to a recent JP Morgan estimate.
