Crude oil price

Demand for crude oil

Prices for Oil are very volatile and change every second. Here we will find out the answer to the question that why crude oil price change so frequently and factors determine the crude oil price.

There are some factors that lead to determine crude oil prices.

* The first is demand for crude oil

The summer season driving generally leads to an incremental demand for fuel which pushes the crude oil price upwards. An opposite trend is prevalent in winters as far driving demand is concerned.

Crude is also basic source to meet the heating requirements during winter season, therefore its demand to meet the heating needs is increased in winter season pushing the crude oil price upwards.

A lot of crude oil goes into fuelling requirements of many industries for running the industries and transportation of raw materials and finished goods around the world, as robust world economy would mean greater demand for crude oil.

Crude oil is traded as a commodity on futures exchange the speculative trends are responsible for increase and decrease of crude oil price.

* The second is crude oil supply

Organization of the Petroleum Exporting Countries is a supplier group that controls 46% of the world's supply of the crude oil. These groups based out of various different factors can decide to increase and decrease crude oil supply which is affecting the crude oil price in the international markets.

OPEC member countries were quick to realize that they controlled major chunk of world's oil economy and if they compete against each other their net realizations will be very low. So they decided to form a cartel which takes joint decisions with regarding to controlling of oil supply and crude oil price.

Production of crude oil is limited to a geographical region, any unrest in these areas can limit the crude supply in the world market leading to instant rise in crude oil price. World witnessed this phenomena at the time of Gulf war when the oil prices went shy high.