Big news with oil prices being so high. Who the finger pointing to?

“Some say it is because the Opec cartel is unwilling to boost its supply levels.

Others say it is because of fears about supplies from other countries such as Nigeria and Venezuela.

But the truth is, it could be something completely different.

The fundamentals

“Why did it happen on Tuesday? Nobody really knows for a fact what’s happening or where it’s going,” says John Hall from the energy consultancy John Hall Associates.

So what is it that moves oil prices up and down?

“It’s the fundamentals, stupid,” says Mark Lewis from Energy Market Consultants.

The fundamentals are factors that influence the supply of, and demand for, oil.

Things such as the increasing demand from China and India, as well as fears that a stand-off between the US and Iran could interrupt supplies, have been raising oil prices.

Alternatively, financial factors may be at work, such as a hedge fund having to sell a particular oil contract so it does not end up receiving a tanker-load of oil - or a trader deciding it would be fun to be the first to trade oil above $100 a barrel.

The problem is, much fundamental information is not freely available.

No sense

“We really don’t know what the fundamentals are doing at any point in time,” Mr Lewis says.

“The markets are looking for signals from the fundamentals. Some of them are irrelevant, some of them are wrong, some of them are meaningless, but they affect prices nevertheless.”

When the New York oil price broke through $100 a barrel for the first timeat the start of 2008, one of the factors cited as being behind it was the assassination of Benazir Bhutto in Pakistan on 27 December 2007.

That didn’t strike us as making any sense at the time,” says Sean Cronin, editor of Argus Global Markets.

He says that people are too keen to attribute market moves to geopolitical factors.

He attributes rising prices to over-optimistic expectations of oil production by non-Opec countries - and also to signs that Opec members appear to have a greater tendency to stick to their output limits. ”

Read The Entire Story, Click Here!

Reduce Global Warming, Double Gas Mileage!

 

• High gas prices have you frustrated?
• How can I double my gas mileage?
• Is There a Way To Be Green Friendly?

 

Top Related Posts

• Travel China - Learn How To Travel To China 55% Off On Air Flights!
• SizzleHot: The Hottest Top Downloads!
• TheBuzz: How To Save Over 80% At The Gas Pump!
• Top News Video On Demand: Oil Prices On The Rise, What’s Being Done? (Complete Video News Coverage)
• Mile High News: Oil Price Still Near Record $142

Get Paid To Test PlayStation 3 Games and XBOX 360 Games!!!

 Subscribe in a reader

Have a comment for us? (Read our Privacy Statement under "Comment Rules" before you comment.)