The article is about the record high prices of oil and the reasons behind the price mechanism on the world market from oil. Two main reasons are pointed out in the article, namely increased demand for oil and reduction in the supply.
Demand is the total amount of goods and services that consumers want and are willing to buy at any price over a period of time. There are several factors that can influence demand: price, availability and price of substitutes, expectations of consumers of future price, etc. In this article it is made clear that consumers are driven to buy more oil at the lower prices- ÃÂcoming in to buy into dipsÃÂ. Their expectations are that the price of oil will rise even further and they want to have enough stock e.g. factories, dealers before price rises. The expectation of dealers on their US market that the weekly figures for the oil reserve in the US ÃÂ on Wednesday would show a sharp dropÃÂ is that D curve shifts to the right which increases the price of oil on the US market.
GraphÃÂ ÃÂ On this graph we can see the initially price was at level ÃÂ ÃÂ and quantity demanded was ÃÂ .. The consumersÃÂ expectations of higher prices shifted the D curve to the right and this increased the price to the level of ÃÂ .., and increased quantity demanded to ÃÂ ..
Another factor that influences the price of oil on the US market is the ÃÂsense that supplies are tight in a country which consumes a quarter of the worldÃÂs oilÃÂ. Supply is ÃÂ ÃÂ This sense of future reduced supply comes from the Us Energy Information Administration revising ÃÂ its projection for US crude stocksÃÂ at lower levels, while projecting a demand for oil for the fourth quarter that will increase with...