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What factors affect the price of oil?

Oil seems to play an even greater role in the worldwide economy. Oil prices control by traders who bid on oil futures contracts in the commodities market. The oil futures contracts are agreements to sell or buy oil at a specific date in the future for an agreed-upon price. Gasoline prices did hurdle after Trump’s announcement. Donald Trump recently made headlines for pulling out of the Iran nuclear deal. One of the things people wanted to know is if it will impact what they pay at the pump. Most investors follow either WTI or Brent crude.  Oil prices are influenced by three major factors: geopolitics, supply, and demand. In 1857 the first commercial oil well was drilled in Romania. The U.S. petroleum industry was born two years later with an intentional drilling in Titusville, Pa. What factors affect the price of oil?

 

Three Factors Traders Use To Determine Oil Prices

What factors affect the price of oil? Since 1973, OPEC limit supply of 61 percent of the world’s oil exports. U.S. shale oil production doubled between 2011 and 2014. Prices fell in December 2015 to $36.87 a barrel. Shale producers need $40-$50 a barrel to pay the high-yield bonds they used for backing. These reserves can be accessed easily to increase oil supply if prices get too high. Saudi Arabia can tap into its large reserve capacity. In winter, weather forecasts are used to determine potential home heating oil use.

What factors affect the price of oil?

Supply

What factors affect the price of oil? Demand and Supply have to do with how much oil is available. If major oil-producing countries are pumping out a lot of crudes, the supply will be very high. Oil prices fell as producers pumped more than the world could consume. OPEC said U.S. shale drillers were to blame for pumping too much.

 

While members of OPEC are preparing to hold a decisive meeting in Vienna, Donald Trump once again casts a finger on the charge. And during a Twitter message, OPEC has been responsible for rising oil prices in recent months.

Of course, this is not the first time that Trump has targeted OPEC for its Twitter criticism. He also accused OPEC of manipulating oil prices and attempting to artificially increase it on its Twitter page several weeks ago. But if we look more closely at the case, unlike the president of the American adventure, we will conclude that OPEC, despite being one of the famous cartels. And the basis for the formation of cartels is an attempt to maintain monopoly power and pricing power on the market – at least in the last 30 years.

There is no reason why OPEC wants to increase the production of its oil by the desire of the trump or anyone else. The existence of this organization is as long as the interests of its members are ensured. Of course, some OPEC members may see their interest in satisfying the United States. But this certainly does not apply to all members.

Less than two years ago, Harold Ham, a consultant to Donald Trump’s electoral campaign, called OPEC an irrelevant organization, but changed within a month and announced that it was time for OPEC members to restrict their oil production capacity To help raise prices, they agree.

 

Production control

What factors affect the price of oil? They are joined by non-member oil producing countries. Its key tool is to manage its own production levels either by reducing whether it wants to raise prices or by increasing inventories if it wants prices to fall, at least to the point where prices collapse. Two non-OPEC countries are of particular importance in different ways: the United States and Russia.

What factors affect the price of oil?

No one expects politicians or their advisers to stay out for a long time. And it should also be borne in mind that the price of Texas at that time was only $ 46, and oil shale innovation in the United States is in bad shape. At the same time, Saudi Arabia’s petroleum minister and oil minister predicted the US government’s intention to reduce its oil production and supported the adoption of the oil freeze plan at the OPEC summit on oil prices.

 

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