Oil Market Essay Example | Topics and Well Written Essays - 1250 words

Oil Market - Essay Example This application, in intermediaries’ purchasing patterns, may also play a role in determining the prices of crude oil from exploration companies (Organization of the Petroleum Exporting Countries 5). Oil supply 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. Supply growth rate in America increased from the year 2011 to the year 2012 but the rate, while positive, reduced in the year 2013. Growth rate in Europe, in the past three years has however been negative with a reducing rate, an indication that oil productivity in the region is declining. Even though at lower rates than those reported in non OPEC European countries, countries in Pacific Asia have similarly reported negative percentage growth rates in the past three years. Other oil producing regions such as other parts of Asia, †Å"Latin America,† â€Å"Middle East,† â€Å"Africa,† and FSU have however registered minimal changes in produced volumes with more negative percentages and the trend in the non-OPEC countries indicating a general reduction in oil supply in the past two years (Organization of the Petroleum Exporting Countries 34). A slight increment in supply volume has however been forecasted among non-OPEC oil producing regions. Oil supply from OECD countries has however been increasing while supply volumes from developing counties has registered a reducing trend between the years 2010 and 2012 by assumed an increasing trend in the year 2013. Supply volumes from former Russian States and other non-OPEC regions have also reported increasing... 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.