The oil market is one of the most volatile in the world, and it fluctuates often due to current events, global markets, and economic demand. Oil is needed around the world for a number of different things, but all these things play into the changing prices that people see. Plus, people who want to invest in oil need to know why it keeps changing the price so much. Read more below about what your options are.
OPEC formerly known as Organization of Petroleum Exporting Companies is the main influencer of fluctuations in oil costs. This organisation may be an association created from 14 countries: Algerie, Angola, Ecuador, Spanish Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Kingdom of Saudi Arabia, the United Arab Emirates and Venezuela.
Organisation controls four-hundredth of the worlds provide of oil. The association sets production levels to satisfy world demand and may influence the value of oil and gas by increasing or decreasing production.
- Oil Companies And Production
Oil companies change their production schedules all the time, and a company like Spectra Oil will need to change production based on what the market tells them. Because of this, these companies often see a change in their sales because people are taken aback by sudden changes in price. The markets are constantly shifting, and oil prices have to change to meet that demand.
- Current Events
Current events can dramatically change oil prices because the markets get nervous when certain events occur. The price of oil could go up or down based on how people feel about the markets generally, and these markets might shift because a certain country is performing poorly or very well.
- Gold Prices
Gold prices have always been tied to oil because they tend to move up and down together. If you see a dramatic shift in oil prices, you might want to look at what gold prices did. The gold prices might have moved first, and the gold markets got nervous. If gold prices spike for some reason, the oil markets tend to rise at the same time.
Market demand changes the way that oil is priced. There are many people who need gas in the summer because they are travelling. This causes oil prices to rise. When the demand drops, oil prices will drop because people are not travelling as much.
If there is a spill or a catastrophe, oil prices might drop because the markets are no longer impressed with oil. This makes it much easier for people to get the oil they need because they just watched the price go down.
- The Oil Producing Countries
OPEC countries can set their production in any way that they like, and they will change their production based on what they think the price should be. They have a love of control over what the oil price will be, and they often change it because they want to make sure that they can get the profits that they want. Also, these countries have a coalition that will ensure they are all acting in tandem. This makes it much easier for them to shift their prices in the blink of an eye.
- Oil Reserves
Every country has an oil reserve, and some reserves will rise and fall in size depending on what the country has chosen to do with their oil. Because of this, the price of oil will change because these countries might use or sell some of their reserves. Plus, these countries will find that they can get much better results from these oil reserves because they realized they did not need as much. This drops the price of oil on the open market.
The price of oil is something that people hear about every day without realizing how much it impacts their daily life. The price of oil changes because of current events, the demand for the oil, and the way that oil producing countries are changing their production levels. Watching this market carefully helps you make wise investments or find the right time to stock up on gas.
As with any goods, stock or bond, the laws of offer and demand cause oil costs to alter. Once offer exceeds demand, prices fall, and therefore the inverse is additionally true once demand outpaces offer. The 2014 fall in oil costs may be attributed to lower demand for oil in Europe and China, including a gradual provide of oil from an international organisation. The surplus offer of oil caused oil costs to fall sharply.