Are Crude Oil Prices Set For a Fall?
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Jayeshvasava asked:
Many analysts have anticipated a permanent drop in the base prices for crude oil as the world shifts to a more efficient economy based on natural sources of energy, such as wind, solar and hydrothermal energy. There are also seasonal shifts in the market which affect prices as well, as demand for crude tends to be high in the summer when travel and global trade tend to peak, as well as late in the winter when demand for heating oil and commercial transport increase along with consumer behavior.
While we may be working towards long-term shifts away from oil as the dominant energy factor in production, crude oil remains a core raw material in commercial and industrial production, and demand should be relatively stable in the near turn. The ultimate determinant for the near turn price of crude oil will be how quickly the global economy recovers for recession, as global trade is a major factor in the near term prices of crude oil.
Speculation that oil prices may fall in the near future relies upon steady supply production, which follows recent trends from OPEC nations. While the members of the cartel have maintained consistent production this year and the global economy has stabilized, resulting in a near halving of crude oil prices over the past year, the pricing trends going forward will depend on a wide variety of factors that relate to global economic recovery. If the global economy continues to trend toward a long term recession, then global trade volumes are likely to fall based on depressed consumer and industrial demand, resulting in a near term fall for crude oil heading into next year. The data suggests, however, that it’s much more likely that crude prices will remain steady as the economy recovers.
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Many analysts have anticipated a permanent drop in the base prices for crude oil as the world shifts to a more efficient economy based on natural sources of energy, such as wind, solar and hydrothermal energy. There are also seasonal shifts in the market which affect prices as well, as demand for crude tends to be high in the summer when travel and global trade tend to peak, as well as late in the winter when demand for heating oil and commercial transport increase along with consumer behavior.
While we may be working towards long-term shifts away from oil as the dominant energy factor in production, crude oil remains a core raw material in commercial and industrial production, and demand should be relatively stable in the near turn. The ultimate determinant for the near turn price of crude oil will be how quickly the global economy recovers for recession, as global trade is a major factor in the near term prices of crude oil.
Speculation that oil prices may fall in the near future relies upon steady supply production, which follows recent trends from OPEC nations. While the members of the cartel have maintained consistent production this year and the global economy has stabilized, resulting in a near halving of crude oil prices over the past year, the pricing trends going forward will depend on a wide variety of factors that relate to global economic recovery. If the global economy continues to trend toward a long term recession, then global trade volumes are likely to fall based on depressed consumer and industrial demand, resulting in a near term fall for crude oil heading into next year. The data suggests, however, that it’s much more likely that crude prices will remain steady as the economy recovers.
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