3 effective factors in oil prices
| By: Wab1|
of Wednesday 17/2/2016 1:30
is a crude economic strategy commodity, reflecting its importance in the markets
and international (commodity globalization par excellence). The influencing factors that interfere in determining the price are: the balance of supply and demand that determines the price up or down approach in the medium term. And daily speculation in global stock markets that lead to the fluctuation of prices vessels. Political relations major producing countries. Is there only one factor plays an influential role, or that prices are affected by all these factors are intertwined?
Price is influenced by the interaction of three factors and the role of each in a specific time period. For example: did not play the daily speculation in the oil exchanges role in determining the prices before the seventies, it was the world's oil trade in the mid-twentieth century monopolized by Western oil giants «Seven Sisters». And adopted the term is the founder of the company «Eni» Italian Enrico Mattei. Nor did global supply and demand balance also affects the average prices for periods of medium-range until the early seventies, because «Seven Sisters» was a monopoly of production and markets. It was produced according to demand in the markets that are controlled. And then it expanded markets, and the number of countries and companies producing increased. In spite of the high production capacity continued confined to three or four countries, the number of countries exceeded 55 countries, but a large disparity in the rates of production. More importantly, the number of operating companies, has emerged the national oil companies that have the franchise for the production of the country's reserves, which exceeded total reserves that produce them giants. It founded as a lot of independent companies that started working in their country first and then expand internationally activity. And emerged as well as oil trading companies and marketing, not to mention thousands of speculators from individuals and companies in the global stock markets.
As well as for the role of global stock markets, which led to daily fluctuations in prices, why this phenomenon stand out significantly only after the opening of markets and the emergence of the purchase and immediate futures, unless possible before the seventies, with the monopoly of «seven sisters». Markets and speculation has expanded after the opening, which led to a change in daily prices and broad and influential role of the media, which carry both the news and the common. And expanded news agencies services, not only did the distribution of political news or general economic, even took allocates a large space for news commodities prices, especially oil and gas, petroleum products, which led to an increase in the number of subscribers, especially in the financial and oil firms, who have become addicted to this news and certified in their information. Adopted markets specialized agencies and services, and at the same time drawing on agency buyers and sellers directly, announces the daily price of the market based on unofficial information available to it, but for its sources. This multiplicity and inconsistencies in the information leads to price swings, for example, we find that these days the price of oil rises or day after day about 1-5 percent decline. The reason for this is Venezuela's attempts to reach a compromise solution, and a tour of its oil minister and the ministers of producing countries in order to reach an understanding on this matter. And return volatility in the price of oil daily to the information or rumors circulating in the market based on the permit or leaking information of this oil source or another about the outcome of these meetings. There is also a weekly news about the stock trading volume, the effect of the wave of severe cold and snowstorms from here, or interruption of supplies after industrial or terrorist incident.
The one hand, the political factor, it has been linked to the oil industry policy history since its inception at the end of the nineteenth century in the United States, it has We broke sharp internal political differences between the conflicting interests. Painted Map Middle East in the light of the petroleum interests of the major European countries as a form of distribution of the spoils after the First World War, and the evolution of the political role of oil in particular with the start of its use as fuel for passenger ships instead of coal during World War I, it gave navies stronger speed. And disputes broke out between the Allies and the Axis powers over control of the oil fields and pipelines during World War II. There are a lot of accidents on the intervention of the major powers in the interest of oil companies in Latin America and the Middle East, most notably a plot of American and British intelligence to overthrow the former Iranian Prime Minister Mohammed Mossadegh, who nationalized oil company Anglo-Iranian 1953.
Price affected by a number of interacting, interrelated factors, it is difficult to separate them or adopt a single view of the deterioration of the prices, there for the balance of supply and demand, the glut in commercial oil inventories, which increased the quantity of the reservoirs in the land, companies resorted to storage in tankers on the high seas. There is a daily surplus in production of more than one million barrels per day. It is very difficult to price correction without a collective effort to reduce production and thus reduce the trade repository. As long as this huge inventory is present, it will continue to impact negatively on the rate of price.
There is conflicting information leaked about how successful tour of the Venezuelan minister. More importantly, the extent to which the agreement with Russia and its implementation, and the Middle East suffer actual wars, internal, regional and international. There are open conflict on several fronts between the two major producers: Saudi Arabia and Iran, in addition to a new Cold War arenas in the Middle East and Eastern Europe between Russia and the United States.So what is the role of oil in these conflicts?
It is clear that lower prices had a negative impact on both the Russian and Iranian economies (although the latter benefited from the lifting of sanctions). But it is also evident that many of the producing countries, members of the «OPEC» adversely affected by the deterioration of prices, including the Arab Gulf states, not to mention the United States.
Under these interrelated factors, it is difficult to stick to just one factor without the other reason the President of the deterioration of the prices.