Ah. Now I see where you get the idea that a small increase in supply can lead to a large change in price. I asked alound in another thread.

You are mistaking short term effects and long. Yes, oil prices are volatile and sudden changes affect the market dramatically. I'm not sure how you calculate the figure that we've had a 1% decrease in demand (how on Earth do you quantify demand?), but in any case, the market behaves very differently in the long-term compared to the short, because it is only inelastic in the short-term. If you weren't aware of that, that may be why reputable economic models appeared flawed to you.