However, while low prices are finally having a noticeable impact on U.S. producers, a situation that is likely to continue, other producers are ramping up. OPEC production is running at close to 32.5 million bpd, a rise of more than 2 million bpd since last summer. Several key producers, including Saudi Arabia and Iraq, have been increasing production in an effort to defend market share ahead of the likely lifting of Iranian sanctions in 2016.

Plus, even in the United States, production efficiency is improving, according to data accessible via Bloomberg. This is why, despite the collapse in prices, production is still 1 million bpd higher than it was at the start of 2014.

On the demand side, while lower oil prices have resulted in a modest pickup in usage, economic growth, particularly in emerging markets, simply isn’t strong enough to produce a sharp increase in demand.

What could cause oil prices to break out of the expected range? A major risk to the downside is that the slowdown in emerging markets infects developed markets, leading to a global recession. On the other hand, given the ongoing security issues in the Middle East, it’s still possible that a significant supply disruption (one measuring at least 2 million bpd) could push oil back to, or through, the upper end of its range. In the absence of either scenario, investors should expect continued range bound volatility.

Russ Koesterich, CFA, is the Chief Investment Strategist for BlackRock. He is a regular contributor to The Blog.