|
Oil is one of the world's basic necessities - at least for now, most people in developed countries cannot live without it. In 2005, the price of oil at its peak was close to 65% higher than where it started in January of the same year. Oil now is at its all time high record near 110 dollars per barrel.
There was a time when we would expect such volatility only from a penny stock, but this has become our reality. The rise in oil prices has brought a great big smile to the faces of oil producers - and a nice fat boost to their pocketbooks. Oil consumers, on the other hand, have had to pinch pennies throughout the rally. As a net oil exporter, Canada has benefited the most from the rally in oil, while Japan - a major net oil importer - has suffered the most.
Prices for crude oil, crude oil products and natural gas constantly change in response to new information and reflect the adjustments being made to previous and prospective expectations. Unanticipated new information quite often induces extreme price volatility creating a price shock. For example, the 1973 oil embargo by OPEC members caused oil prices to spike to historical highs.
Weekly Petroleum Reports
Weekly oil and natural gas supply data is published by the Energy Information Administration (EIA) an independent agency of the United States Department of Energy. In fulfilling its responsibility as policy advisor to the Department of Energy, the EIA's job is to objectively collect, interpret and analyze all energy-related data.
Crude Oil Inventories
Crude oil is the primary refinery input; therefore, any changes in the level of crude oil inventories from one reporting period to another not only impact the price of their underlying futures contracts, but will also affect the price of underlying futures contracts of associated refined products like gasoline. The petroleum inventory data showing the level of U.S. crude oil inventories first highlights the portion of current inventory produced within the U.S. then it highlights additional data indicating the portion of total crude oil inventory that was imported.
The Effect on Oil and Natural Gas Futures Prices
Any Information concerning crude oil supply levels will affect the price of Oil in financial market. Example, energy future prices tend to rise following an inventory report that indicates that gasoline inventories remained unchanged, whereas analyst prediction may have expected that inventory to rise.
Oil and currencies
· If oil prices rally, price of currency of oil-dependent country is likely to fall.
· If oil prices rally, price of currency of oil-exporter country is likely to rally in near term. (Canada, Norway, Russia, Mexico).
|
