This paper describes oil prices, oil supply, demand, determinants of oil price, personal opinion.
According to the paper trend in global oil prices has remained volatile over the past six months. Data from OPEC identifies three measures for oil prices over the period and the measures, though not equivalent over the time shows a consistent trend to support the hypothesis that prices in the oil market are relatively volatile.
Global supply of oil has been another significant factor in the oil market. A review of growth rate in the produced volume by different regions identifies volatility in supply volume with a significantly lower growth rate in the year 2013.
Demand is another significant factor to the oil market. The global demand has a predictable trend that can be used to forecast future levels of demand.
Price mechanism is also significant to understanding the oil market through factors that determine the prices and the factors’ interaction to dictate the prices over time. Region of utility is one of the factors to oil prices and the level of industrialization determines price volatility by regions with demand shock as the key moderator. Oil prices in developing countries responds quickly and faster to demand shock as compared to prices in developed countries and this knowledge can be instrumental to oil distributers.
The oil market is a competitive market that is majorly regulated by demand and supply forces. Data also indicates massive utility in OECD countries, especially in America, and significance of developing countries in determining global prices. Consistency in the market’s data trend means that it can be used to guide investment decision and a potential market is identifiable in America that has high demand for oil. Analysis of the market in developing countries is also necessary for predicting prices towards investment decisions. ...