According to Meyler (2009), the crude oil prices have been buffeted by many factors, which are described below.
Production
The OPEC nations are the major producer of world's crude oil. Therefore, every policy made by such countries related to the crude oil prices has their influence on crude oil prices. Any decision taken by OPEC nations for increasing or decreasing production of crude oil impacts the price level of crude oil in international commodity markets (Meyler, 2009).
Natural Causes
According to Meyler (2009), in recent years, global communities have witnessed many events which in turns have volatility effects on the price level of crude oil. For an example hurricane Katrina and other type of tropical cyclone have hit the major portion of globe, which as a result driven the crude oil prices to reach at its peak.
Inventory
Throughout the world, oil producers and consumers stock their crude oil for their future requirements. This gives rise to speculation on price expectations and sale/arbitrage chances in case any unexpected thing cracks during supply and demand equations. Any upward or downward movement in inventory level shoots up volatility in price index of crude oil, which generates lot of changing movement in census (Meyler, 2009).
Demand
With a sharp rise in economic demand, requirement of crude oil is increasing to manifold in context to the limited supply. The high demand economy of crude oil is putting undue pressure on the available fixed resources. The major gap created between demand and supply of crude oil is forcing the price curve of crude oil to rise in upward direction (Meyler, 2009).
The price structure of crude oil is also influenced by the cyclical pattern. It has been observed that requirement of crude oil got increased during summer season in comparative to the winter season. As any dip in the seasonal temperature increases the consumption of energy for heating purpose in many cold nations, demand shoots up and thus generates the requirement of tapping the inventories. Similarly, in summer, supply exceeds the demand and petroleum inventories are building up for storage purpose. Henceforth, crude oil prices drop (Deltef, 2009).
Production
The OPEC nations are the major producer of world's crude oil. Therefore, every policy made by such countries related to the crude oil prices has their influence on crude oil prices. Any decision taken by OPEC nations for increasing or decreasing production of crude oil impacts the price level of crude oil in international commodity markets (Meyler, 2009).
Natural Causes
According to Meyler (2009), in recent years, global communities have witnessed many events which in turns have volatility effects on the price level of crude oil. For an example hurricane Katrina and other type of tropical cyclone have hit the major portion of globe, which as a result driven the crude oil prices to reach at its peak.
Inventory
Throughout the world, oil producers and consumers stock their crude oil for their future requirements. This gives rise to speculation on price expectations and sale/arbitrage chances in case any unexpected thing cracks during supply and demand equations. Any upward or downward movement in inventory level shoots up volatility in price index of crude oil, which generates lot of changing movement in census (Meyler, 2009).
Demand
With a sharp rise in economic demand, requirement of crude oil is increasing to manifold in context to the limited supply. The high demand economy of crude oil is putting undue pressure on the available fixed resources. The major gap created between demand and supply of crude oil is forcing the price curve of crude oil to rise in upward direction (Meyler, 2009).
The price structure of crude oil is also influenced by the cyclical pattern. It has been observed that requirement of crude oil got increased during summer season in comparative to the winter season. As any dip in the seasonal temperature increases the consumption of energy for heating purpose in many cold nations, demand shoots up and thus generates the requirement of tapping the inventories. Similarly, in summer, supply exceeds the demand and petroleum inventories are building up for storage purpose. Henceforth, crude oil prices drop (Deltef, 2009).
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