The price of a barrel of oil fell by more than $20 in the month of July: striking, given that only a few years ago, a barrel did not even cost $20. If the fall to $124 a barrel sticks, and if the price falls further, it will relieve some of the pressure on prices and real living standards around the world. The oil price is probably above its equilibrium, but, unfortunately, rapid falls do not look likely.

There are a few reasons to think oil’s fall is a dip rather than the start of a trend. First, there has been no big rise in stockpiles of crude oil or petrol; on the contrary, US inventories are low, even given the summer driving season. That suggests that the short-term market is still tight. Second, there has been little change in the shape of the futures curve, for deals to buy oil years from now. The curve remains flat, with futures for 2016 still above $120 a barrel. Futures utterly failed to predict the rise in spot oil prices over the past few years but, nonetheless, high prices suggest the market has little confidence that new supply will soon bring about a collapse in prices.