Oil prices at a six-month low

Oil prices are dropping worldwide.

Over the last month, oil prices have dropped significantly, largely due to a gap between supply and demand, according to Market Realist.

On June 28, West Texas Intermediate (WTI) was trading at around $61 per barrel. As of August 3, WTI has fallen all the way to $45.17 per barrel. 

Market Realist reports that the current gas prices are outpacing industry estimates. Goldman Sachs estimated prices wouldn't hit $45 per barrel until October, but supply and production highs as well as an appreciating U.S. dollar have forced prices to hit that milestone sooner. Short term estimates say that prices will likely fluctuate between $44 per barrel and $50 per barrel in the short term, but prices as low as $40 per barrel are not out of the realm of possibility.

The reason, according to the Associated Press, is a large supply worldwide. They explain that Organization of Petroleum Exporting Countries (OPEC) nations, especially in Saudi Arabia and Iraq, have maintained high levels of production while importing nations, like the U.S., Canada and China, have had production highs of their own. This combined with the potential for Iranian oil to enter the market soon and a current saturation level has emerged. 

Domestic production isn't expected to decrease anytime soon. Despite small drops in the number of operating rigs, the U.S. is still producing at record numbers. Goldman Sachs predicts that, while a drop in rigs will translate to a drop in production in the short term, levels are expected to climb even higher in the first half of next year. 

While a drop in oil prices are generally good for consumers, it becomes harder for oil producers to stay in the black.