Every six months a good crowd shows up at the Petroleum Club in Calgary to hear the latest on oil and gas markets. This morning was different with a long lineup to get in and standing room only space for the breakfast event.

"A lineup to hear the good news," one person sarcastically quipped. 

"The free breakfast is probably the biggest draw of the presentation," joked FirstEnergy's chief executive John Chambers as he kicked off the event.

The firm's commodities analyst Martin King took the stage to deliver his latest forecast. With such a dismal outlook, further icebreakers were needed.

His presentation was titled, "Staring into the Abyss (Highway to Hell)?"

The AC/DC reference is a common trend. Eighteen months ago as prices were beginning to tank, his talk was called "You shook me all night long."

This morning's market update was otherwise short on bliss.

Oil prices have fallen by about 73 per cent in North America since the peak in 2014. U.S. crude oil inventories are at record highs and could go higher.

The rebalancing in the market could be delayed until well into 2017, according to Martin King, a commodities expert with FirstEnergy Capital.

"Low prices mean the end of low prices at some point. Supplies will be impacted. Demand will grow. It is still growing. This market will find balance," said King.

King says oil prices will likely average around $36.75 US a barrel in 2016. That's a drop from his December forecast of $49.75 for this year. The price of West Texas Intermediate crude continued to fall on Tuesday, down $1.07 to $28.34 US a barrel. 

FirstEnergy Capital slide oil prices January 2016

Graph shows the sharp fall of oil prices in North America. (FirstEnergy Capital)

A similar forecast this morning from the International Energy Agency also offered little optimism for a battered industry looking for signs of a recovery.

Global oil markets could "drown in oversupply," sending prices even lower as demand growth slows, according to the IEA. "So the answer to our question is an emphatic yes. It could go lower."

As sanctions lift on Iran, the country could add 300,000 barrels a day in the next few months and 600,000 barrels a day by the middle of the year, the IEA said in its latest report. The agency suggests that level of production could be enough to pressure prices further around the world.

Canadian oilsands supply is still growing and companies are not expected to shut in production even during low oil prices. Some companies, such as Connacher Oil and Gas, are accelerating planned maintenance.

The fundamentals of this oil downturn are different than in past decades, argues FirstEnergy's King, because OPEC is not playing a role in moderating prices.

"For the last 30 or 40 years, you could always say OPEC, at the end of the day when prices got bad enough, pulled barrels off the market. That's not going to be the case this time," said King.

"Across the history of the crude oil market, there's always been some sort of supply management going on even going back to the days of the Texas Railroad Commission back in the early 20th century. This might be the first time in 100 years were we are actually subjected to pure price forces in the market determining where demand should go, where supply should go." 


Two forecasts on Tuesday are providing little hope that oil prices will recover in 2016. (Dan Riedlhuber/Reuters)

That's why forecasting what direction oil will go is difficult and why a full crowd showed up in Calgary to try and make sense of the situation. Alberta entered a recession in 2015, with layoffs of more than 35,000 in the energy sector.

King received an ovation for this presentation, but then again, maybe the applause was for the free breakfast.

"I hope people still have things to do for the day," said King, a final wisecrack to wrap up an otherwise glum outlook.