Supply and Demand

S=Supply, D=Demand; 
X axis = Quantity Demanded
Y axis = Price in $
At PBAR (top, blue) Qd and Qs have an excess of supply.

At P2 (orange) Qd is less and Qs is more. The excess of supply decreased as the price moved toward the equilibrium(intersecting points)
P* is the equilibrium price at which supply and demand will always flow to. This concept is similar to a pendulum that always swings toward the equilibrium spot.

my good friend Khan helps us out on this topic with his microeconomics video: