Opinion: June 7, 2021. What Determines Oil Prices?

in LeoFinancelast year

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Oil is one of the most needed items in the world, and in fact, the whole economy is based on it. It the the source of energy which will be refined into gasoline, diesel, kerosene, etc. It is also key raw material for the production of plastics without which our culture would be unrecognizable. Additionally, oil is the base of the pharmaceutical industry.

Oil is traded in the futures market. There are 2 types of traders. One group of them are hedgers. They try to secure good oil prices in the futures market in order to avoid paying more in the future. The other group is the speculator-type. They only trade contracts depending on their perception of a future price. They do not intend to use the oil. The interactions between these type of traders helps determine the oil price

The oil market is very emotional and the mere idea that the price of oil might change (usually based on world events) determines the feelings of hedgers and speculators.

Finally, the presence of oil cartels such as OPEC is important because they can determine the supply of oil available for countries willing to buy it.

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Please stop tagging and spamming.

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I asked this yesterday too!

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Sorry for the inconvenience, I did not know it would cause an issue. I appreciate your politeness

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please stop tagging me. Thanks.

Sorry for the inconvenience. I will stop right away.

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