Blog
Light at the end of the pipeline?
16th July 2008
It is not supply that will drive the world price of oil down in the near term - it is demand. Oil prices dropped by the biggest amount in three-and-a-half years yesterday as commodity dealers sold on fears that the world’s leading economies are facing a sustained economic downturn. A firmer dollar and weaker prospects for economic growth should - in the absence of supply shocks to crude production and refining output - bring prices down further providing some relief to motorists, the aviation industry and countless others.
Prices are incredibly volatile at the moment - and the huge number of options contracts tends to increase volatility, with computers programmed to automatically sell once prices reach certain thresholds.
The Guardian: “Fears of recession drive shares and oil prices down”
Geoff Riley
Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.