Wednesday, September 11, 2019

Price drop of crude oil Essay Example | Topics and Well Written Essays - 500 words

Price drop of crude oil - Essay Example In addition, several deals that America has made with war-torn oil-producing countries. The art article addresses the factors mentioned above. The quantity of crude futures declined in the recent past on concerns that the global oversupply is hurriedly filling oil stocks. Total petroleum output in the year 2015 is expected to go up to 9.35 million barrels every day. The quantity is slightly more than the 9.3 million barrels daily forecast in the previous period, the Energy Information Administration (EIA) highlighted last week in its monthly short-term energy outlook. Independently, oil stocks went up more than anticipated marking the several consecutive week of a higher overall than at any other time for the last 80 years and more. The American commercial crude oil stocks rose by approximately 4.5 million barrels from the previous week; the EIA said Wednesday. Another reason weighing on oil price is the OPEC policies on the export of crude oil to the global market. As a result, the American oil output could be adversely affected in the recent years due to low oil prices offered by the OPEC countries. In addition, OPEC also outlines that the lower global oil prices may have affected the marginal barrel output from other sources, such as shale. The OPEC is a significant body in the oil industry. Therefore, its decisions and marketing affects trade in crude oil because it controls a large percentage of the world’s fuel production. As such, any decision that they make directly affects the market prices of the commodity (Why the oil price is falling , 2014). In this case, the petroleum trading block may take actions targeting their competitors in order to establish gain control of a larger market. Such activities may include flooding the market with the commodity leading to market forces coming into play and hence price decline.

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