What are analysts predicting in the near future?
Otherwise known as black gold, oil is one of the most important commodities on the planet. The economies of many countries will literally depend upon the price of this fossil fuel and therefore, it should be no surprise that its value can fluctuate over time. One of the most trending pieces of news is the precipitous fall that oil prices have taken over the past year. What has caused such a dip and more importantly, what are analysts predicting in the near future? Let’s take a look at some of the latest oil news articles.
Supply and Demand
First and foremost, investors have recently pointed out that there are several reasons why we have seen the prices of oil fall. The first is related to simple supply and demand. Currently, there is an abundance of oil on the market in relation to its demand. As major economies such as those within the Asian markets are a bit sluggish, investors predict that the demand for this commodity will continue to wane. Another factor is that the United States is boosting its own supplies. Once again, this creates a surplus as opposed to a lack of oil.
Will oil prices drop even Lower?
One recent article written by an experienced analyst observes that oil could fall even further. While it is currently hovering around $40 dollars a barrel, he noted that during times of crisis (economic or otherwise), prices have been known to plunge. The last example was the financial doldrums between 2007 and 2010 when oil fell a massive 77 per cent. Should these figures repeat, the final cost per barrel may be as low as $26 dollars. However, are all bets truly off?
Unforeseen Circumstances
One of the aspects of oil worth noting is that like any commodity, there are times when it will be seen as a safe haven in relation to the volatility of the open markets. So, sudden market shifts or even geopolitical events could cause the price of oil to rise once again as investors look to hedge against open-market losses. We also need to keep in mind that oil is valued with United States dollars. There is therefore a currency factor to take into account. Should the dollar substantially weaken in relation to the euro and the pound, investors may also look to make a bit of quick cash through Forex trades with oil as an underlying asset.
Although recent news points out that oil prices may remain weak, there is nothing to say that this change could not reverse itself from a medium-term outlook. It is also important to keep an eye on current events such as terror threats and the crisis in the Middle East.
