OIL PRICE FORECAST

Oil Price Forecast

Oil Price Forecast

Oil makes world go round. Price of this affects all areas of national and global economy. Fluctuations in price of oil can make products we buy more or less expensive, and can determine profits that companies make to shareholders. Here we report movements of art oil prices, with expert commentators' predictions and explanations of why oil price is moving in way it is. (Nong 2007 13)

Investigation of oil prices is quiet on home of many, but among them are major qualitative analysis and intrinsic base of economic theory or condition simple basics. For example, Hu Ning Lv Rong and analyzed factors affecting oil prices, but supply and demand, as futures market, oil stocks, weather and influence of OPEC. Taoyuan Wei has analyzed how our economy is by world oil price is rising. Until now, the part of document was carried out to quantify or demonstration in oil price fluctuation study. For example, Xiaofeng Mei has been in progress for cause of fluctuating international market oil prices lead analysis. Bo Yu, and Chi Chunjie Guofu Their analysis released at output of the model of an impact of exchange have calculated oil price in our economy. (Taoyuan 2005 4)

Oil prices have risen significantly since 2003. Now it trades at more than $ 100 the barrel and there is uncertainty about its future.

It is really difficult to predict oil prices in next 12 months. Increase in price is partly due to demand growing faster than supply, however, have also been driven higher by speculation. It is difficult to know how to treat oil markets in the climate of increasing financial uncertainty. However, I expect oil prices to remain above $ 100 and possibly even increase by another 10%

Continued growth of economy of China and India. With China grows 10% annually and India is growing at 7%, there is the strong and continuous increase in oil demand. It is important to note importance of these increases. Growing demand from China is likely to overcome the slowdown in U.S..

1. Demand is income elastic. As China, India and other developing countries there is evidence that oil demand is income elastic. This means that as income raises new middle class consumers spend the% of their income on cars and gasoline. So demand is quite significant.

2. Restrictions on supply. Political uncertainty in Middle East, especially about Iraq and Iran is putting limits on availability of oil. Therefore, there is scope for future price. Still seems to be some difficulties about supply in countries like Mexico and Siberia. If these are unresolved prices could continue to increase. (Eduardo 200319)

First half of 2008 saw the super-spike in commodities led by oil. With gravity of credit crisis yet to sink in crude jumped to $ 147 the barrel in July. Demonstration is based on:

• Increased demand from China and other

• Decline in oil reserves

• Increased instability in Middle East

• Increased pressure on oil speculators (read more on this ...