What's going on?

Crude oil�sold off (again) on Tuesday as it settled down 2% on the day and approached $40 per barrel. It's�coming close to the price it hit in August ($37.75) which was the lowest level since 2009.

What does this mean?

The terrorist attacks in Paris have made traders wary that�air travel could decline and therefore hit demand for jet fuel. But the most important part of the story is that there appears to be a large, global oversupply of oil right now � and despite the falling oil price, demand for oil is not rising enough to counteract the oversupply.

Why should I care?

1. The bigger picture: Saudi Arabia is getting what they wanted. Saudi Arabia is both the world�s largest exporter of oil and its cheapest producer. Last year, it pushed the major cartel of oil producing states (OPEC) to continue to pump lots of oil, which led to the 60% sell-off (shown in the chart above). Now, higher-cost producers are curtailing production, e.g. in North Dakota and Alaska. Saudi Arabia is re-gaining �market share� and is actually increasing the amount of oil that it sells.
2. For stocks: Stocks of some of the biggest oil companies are doing ok through this slump. While oil is close to its August low, ExxonMobil�s stock price, for example, has risen 15% since that time. Investors appear to be betting that the biggest oil producers can weather this downturn and ultimately benefit from a future increase in oil price (once production is cut and oil�s oversupply subsides).

Reuters:�