[econjack]

No, I was referring to a shift in speculator's demand for oil and it would be a backward shift because future expectations are now such that being in the market hold less profit potential than before. (You're on the right track in your last paragraph.)

Expectations don't have much of a supply effect. If they did react by supplying more now because they expect future prices to fall, they would just accelerate the price drop.

[curiosity]

No, I was referring to a shift in speculator's demand for oil and it would be a backward shift because future expectations are now such that being in the market hold less profit potential than before.

That's true, but I don't see how that's going to have much of an effect on spot prices.

Expectations don't have much of a supply effect.

If they did react by supplying more now because they expect future prices to fall, they would just accelerate the price drop.

Yes, that's true, but anyone who can readily increase short-run oil output would still benefit from doing so now if it were anticipated that oil prices were going down in the future. Most producers are too small to significantly impact prices with their own actions. Even if the producer is big enough to move prices, he'd still be able to get more now for his oil than if he waits for price drop when new supplies come online in the future. So any producers that can quickly increase production now would do so.

The problem is there aren't many such producers. It's hard to control output from a producing well. Unless a well is on the pump, and most wells aren't, the amount of oil coming out at any given time is determined by geological forces beyond the producer's control. Capping a productive well is also very expensive, so there aren't many capped wells that could be quickly uncapped. That makes it highly unlikely anything is going to happen to supply in the short run.