Oil prices are formed on global oil markets through a combination of fundamentals such as supply and demand for crude oil but also by emotion, speculation and long-term forecasts of oil prices.
When one speaks about oil demand, then factors such as economic growth and energy consumption are important. When one speaks of oil supply, then factors such as productionvolumes, productioncapacity, oilreserves, technologicaldevelopments and geopolitics are of importance.
In addition to the above mentioned demand – and supply factors, financial trade (speculation and hedging) plays a serious role. Also the EURUSD exchange rate has a key role in the formation of oil prices. The last few years trading and central bank’s monetary policies have taken an increasingly dominant role on global oil markets.
The most important market for crude oil and oil products is the New York Mercantile Exchange (NYMEX). This is the largest commodities futures market in the world. In Europe another major oil futures market is based. This market is known as the Intercontinental Exchange or ICE in London.
The following week-chart gives insight in the trend of ICE Brent crude, a crude oil that is traded on the ICE in London.
Want to know more about the formation of oil prices in Northwest Europe, read more on the service PJK International offers: PJK Market Analysis. You can also contact our office.