What Moves Oil Prices?

If you are into economy and commodities market, you surely know what moves oil prices here in Singapore and the whole world. However, for ordinary Singaporeans who are not into these markets, understanding what prompts oil prices to move is complicated and confusing. Surely your teacher explained this when you were in school but you simply ignored it.

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Well, you are not alone. Many people ignored what moves oil prices when they were in school until they have their own cars. Now is the time that you know the intricacies of oil prices so you can understand it better. You should know that there are factors that move oil prices. Here are some:

  • Global oil supply and demand: The prices of oil are driven by international changes in supply and demand. The production of oil is controlled by the Organization of the Petroleum Exporting Countries (OPEC). OPEC exists for one reason – to stabilize price per barrel for oil. In fact, OPEC is keen on keeping oil price around $30 per barrel but unfortunately, there are international events that made this task challenging and difficult.
  • Devastating weather: Oil prices are also determined by external factors like devastating weather. For example, the Hurricane Katrina. The hurricane ceased oil production in United States. Oil supply was cut but the demand stayed the same. As a result, the prices increased.

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  • War: There is no doubt that wars play a vital role in the movement of oil prices. Wars and political instability especially in the Middle East can create a hole because the region is the accounts for most of the oil supply in the world.
  • Recession: A downturn of events can lead to recession. When this happens, people cut back on their expenses. For drivers, the first is to cut-back on their driving expenses including oil. The person can either take public transportation instead of bringing a car. This will in turn decrease the demand for oil. As a result, the price will drop.

Now that you know what moves oil prices, what’s next? You have to know that oil prices here in Asia rebounded on August 19, 2014. According to analysts, this is because of the easing of concerns about the clashes in Iraq and Ukraine. Oil prices are falling down because of the declining of geopolitical tensions in the East and West.

Knowing this, it will help you better understand oil prices. You know when oil prices move, right? It will have a bearing on other commodities.

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