Now that coal has taken the back seat in our energy market, oil is one of our most sacred commodities. But because of this scarily high demand — both domestically and across the globe —the fluctuations in oil prices are astronomical.
We’ve watched this fluctuation happen for years. Jaws dropped when petrol prices rose higher than $1 per litre. Now, it’s like winning the lottery if you manage to fill your tank at that price.
These dramatic jumps are frequent, and don’t seem to have any rhyme or reason to them — at least to the untrained eye.
But if you’re watching closely enough, it’s quite easy to see that these ever changing oil prices tend to reflect what is happening across the globe.
There are multiple international factors that can push up or pull down oil prices.
Recently, tensions in the middle east, the possible renewal of sanctions from the US against Iran, and trouble with supply levels at core oil farms are all forcing up the oil price.
A bit closer to home, the fall of the Aussie dollar could also further increase oil prices.
See, oil — like any commodity — is mostly dependent on market sentiment, supply and demand. So when one of these branches is wavering, oil prices are bound to feel the shake.
But there’s been news recently that countries who are major exporters of oil may remove the current cap on output. If this happens, it’s likely going to bring oil price back down again.
So maybe the days of hunting around the different servos for an affordable fill up will soon be behind us…
Why Invest in Oil
With such a high demand for the product, companies are always on the lookout for another oil reserve to enhance production. This makes the oil sector capital intensive; it costs a lot of money to search for oil, and then even more money to extract it and develop the resource.
Sometimes it can take years between finding a new oil reserve and commencing production, and the latter can’t happen unless the funds are there.
That’s where investors come into play.
Stay up to date
Australia has produced oil since the 1960s and currently holds 0.7% of the world’s oil reserves. The price of oil in Australia is very sensitive to geopolitical events, which we cover extensively here at Money Morning.
With prices reaching near four-year highs in recent months, it won’t hurt to keep an eye on the movement of this much-demanded commodity.
As it looks like oil will remain in high demand for the foreseeable future, we believe it is important to keep you up to date. In this section, we will tell you what’s going on with the oil price and why.
Check out the latest we have on oil down below.