Why is the oil price failing?

There was a great and simply explanatory piece in Saturday’s Guardian. Read it here, but in brief:

  • project demand has been scaled back because of economic worries in the US, EU and even China
  • supply has been picking up as OPEC members beefed up production to capitalise on the high price
  • Geo-political worries (like Nigerian unrest) have eased
  • The dollar is rising again which helps: oil is priced in dollars so companies selling in other companies push the price higher to compensate for the slide in the currency’s value
  • Hedge funds are getting out because of the above

Simple, no?

Technorati Tags:

2 thoughts on “Why is the oil price failing?”

  1. with a bit of luck the people playing in the oil market will decide that there are better returns to be made in the London residential property market… here’s hoping anyway.

Leave a Reply

Your email address will not be published. Required fields are marked *