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On which factors does the prices of crude oil depends,,,?


Supply and demand, obviously.
But also on the 'threats' to supply or demand. Oil "futures" are the most volatile elements of the price of crude and that lies mostly in the realm of speculation, fear, expectations of technological advancement, etc.
Example: trouble in the middle east causes speculators to get they stop investing and the price drops because the demand shrinks.
Example: oil companies often invest in projects which flop and don't produce as much oil as they had hoped or as quickly/cheaply as they hoped. Supply drops (or doesn't increase as it was expected to) so speculators get nervous that their stockpile will be depleted soon so they start buying and investing - which drives the prices up.


There are two: supply and demand. The price of oil is determined by what people are willing to pay... in other words, take into account the supply on hand, the amount of drilling going on, and demand for the product. If demand falls or inventory/drilling increases, the price will fall. If demand spikes or inventory/drilling is curtailed, then the price will rise.

Simple economics 101 stuff.


you forgot speculation and "futures". The price of oil was recently greatly affected by market influences that had nothing to do with supply and demand, but rather had to do with what supply and demand would look like months down the road. The futures market, and it's speculative nature, drove oil over the $130/barrel price this summer.


It's still supply and demand, it's just forecast and estimated instead of actual.


Supply and Demand. The more demand for each barrel of oil, the higher the price.

Oil is a commodity and is traded on Commodities markets.


See comment to first answer.


See reply to comment to first answer. (grin)


UNfortunately, speculation has nothing to do with supply and demand, and has everything to do with greed and profit. Placing bets on world events and seeing how they affect prices is not supply and demand, it Super Bowl Pool economics.


Three things come to mind...

(1) Supply and demand
(2) Commodity Market feeding frenzy
(3) Disruption of distribution to market

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