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What's in store for the oil price?

by , 30 September 2014

Over the last few months, the oil price has come down sharply.

This is in spite of rising geopolitical tensions in key oil producing regions. As it stands, traders don't seem to be concerned about the impact this could have on the availability of oil.

So what's in store for the oil price? Can we look forward to lower or higher oil prices?

Let's take a closer look…

The lower oil price

As it stands, there is plentiful oil supply. This means traders aren’t concerned with developing problems that could have an effect on this.

This coupled with a fall in demand has helped pushed the oil price down.

The future for the oil price

If you look at the longer-term futures contracts on oil, a rise in the price does seem to be on the cards.

Global demand for oil is growing, but it’s not accelerating quicker than the current supply.

Of course, users of oil are welcoming the fall in the oil price.

The lower oil price is helping South African motorists

For instance, here in SA, the lower oil price has helped counterbalance the effect of a weaker rand on the petrol and diesel prices due to come into effect tomorrow.

The oil price may have come down a lot, but looking at the prices compared with last year, the oil price is higher. Oil still isn’t cheap, Dr Kent Moors in Money Morning US explains.

If the price continues to hover around mid-$90 a barrel, chances are demand will rise to take advantage of the lower price. In other words, when the oil price is cheaper, people tend to use more of it.

Analysts believe the current oil price bodes well for economic growth and development. The losers from a lower oil price are the countries that export oil.

So there you have it, what could be in store for the oil price.

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What's in store for the oil price?
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