how crude oil prices are decided in International market?
Back in the month of june- july the prices of Crude oil were more than 0/barrel. As the oil is a limited resources on earth and OPEC have near about monopoly in the sector. demand is also not decreasing. Economics says more demand prices bound to be high. then how the prices can fall to bellow $ 50/barrel? from an artical I come to know that It also affected by Future & option market. so can any body explain me that process also?
Thanks
April 13th, 2010 at 7:28 pm
The process is that there are people who bid every day on the spot and futures markets. The balance of demand between buyers and sellers determines the price. A year ago buyers were willing to pay a lot for future deliveries. Today they are not. If/when that sentiment changes, the pricing will also.
April 13th, 2010 at 7:28 pm
it largely depends on consumer sentiment and the general state of the economy, larger demand in a helathier economy drives supply and price up, and vice versa. price is also influenced by opec who will adjust prices for maximum profit.