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Oil has limits and boundaries just as many other natural resources do. It is puzzling to see oil prices arbitrarily jump up and down all the time. Why can't it rise up steadily over time as it starts to run out of supply? In reality, there are alot of factors that can adversely affect the price of crude oil, and some of them have no relationship with oil exploration or energy processes at all. Novices that have the desire to invest in crude oil need to comprehend certain fundamental factors before they venture into a field that can make them lose all their money at a terrible moment. As with many other industrious fields, the most important thing that counts when it comes to oil prices is demand and supply. Contrary to the expectations of some investors, demand is not so stable and supply can be influenced by several types of external factors. In terms of trading, those who have the interest to invest must consider the local demand within a particular country and the global demand within the other parts of the world. Oil experts have stated that the demand for oil will soon surpass supply as China and India develop technologically and have more cash to spend on motor vehicles. Energy Information Administration (EIA) regularly brings out factual information about demand and supply in the United States. The reports are known to have had a huge impact on local oil. Decisions by OPEC (Organization of Petroleum Exporting Countries) to restrict the exportation of oil, will easily make prices rise up in the rest of the world. Therefore, those with the interest to invest have to make productive use of the results delivered at every OPEC meeting. Due to the fact that political turmoil stirrs up in some oil-producing countries, the oil can't be stable. Infact, conflicts affect oil prices as the market expects a drop in supply. At one time in the past, oil prices jumped up because of the war in Libya. The bombing of pipelines can have an appreciable effect on the global oil market. A change in the earth's chemistry can influence the production and trading of oil in some particular countries, like those that are attacked by hurricanes and harsh storms. Oil prices went up during Hurricane Katrina because of a rise in demand, but it was influenced more by the fact that many oil tankers were unable to dock safely when laying their oil loads at the ports of the United States of America. Lastly oil prices can even be influenced by the refineries that process the oil. If their equipment needs to undergo maintenance or repair, then the local and global supply of oil will be interrupted, and also the price of oil will start going up. Those involved in trading need to acquire sound knowledge of domestic geopolitical risks if they want to make it big. If anybody knows the situation on ground in any country that produces oil, then that person will understand the supply aspect of the market.
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Factors that affect oil prices, oil rise and fall, demand and supply, price of oil, oil investors, oil in the united states, india, china, opec.,
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