What drives crude oil prices?
- Crude oil prices react to a variety of geopolitical and economic events
- World oil prices move together due to arbitrage
- Crude oil prices are the primary driver of petroleum product prices
- Economic growth has a strong impact on oil consumption
- Changes in expectations of economic growth can affect oil prices
- In OECD countries, price increases have coincided with lower consumption
- Changes in non-OPEC production can affect oil prices
- Non-OPEC supply expectations indicate changes in market sentiment concerning oil supply
- Changes in Saudi Arabia crude oil production can affect oil prices
- Unplanned supply disruptions tighten world oil markets and push prices higher
- Inventory builds go hand-in-hand with increases in future oil prices relative to current prices (and vice versa)
**Crude oil prices react to a variety of geopolitical and economic events **
World oil prices move together due to arbitrage
**Crude oil prices are the primary driver of petroleum product prices **
Economic growth has a strong impact on oil consumption
Changes in expectations of economic growth can affect oil prices
In OECD countries, price increases have coincided with lower consumption
**Changes in non-OPEC production can affect oil prices **
**Non-OPEC supply expectations indicate changes in market sentiment concerning oil supply **
Changes in Saudi Arabia crude oil production can affect oil prices
Unplanned supply disruptions tighten world oil markets and push prices higher
**Inventory builds go hand-in-hand with increases in future oil prices relative to current prices (and vice versa) **
Other points to note
**Open interest in crude oil futures grew over the last decade as more participants entered the market **
**Money managers tend to be net long in the U.S. oil futures market **
**Crude oil plays a major role in commodity investment **
Correlations (+ or -) between daily price changes of crude oil futures and other commodities generally rose in recent years