Speculation in oil markets An invisible factor in price decline

Oil supply and demand doesn’t fully justify the severe drop in prices during 2015 as speculation also played a role.

 

A rise in supply from outside the Organization at a time when demand for oil was weak was the main reason for the drop.

 

Brent oil, benchmark for more than half of the world’s crude, continuously retreat to the lowest levels as the U.S. output climbed to the highest level in more than four decades and OPEC members pumped more barrels.

 

“There was one other important factor that contributed to the downturn” OPEC said. “That was speculation.” OPEC’s interest is different from that of traders in the market as speculators need prices to fluctuate to make profits. The stability that OPEC and other energy stakeholders seek is of no help to them and severely limits their scope for gain.

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