The Future of Oil Prices and the Consistency of Change

Posted in Top Headlines by on January 16, 2017

Oil prices fluctuate greatly. However, some people who are just coming into the industry might not realize that there is a constant ebb and flow that produces cyclical trends in the prices we see. The ebb and flow is largely dependent upon occurrences around the world, especially the Middle East, the United States, and Russia.

Positive Impacts on Oil Prices

There are two huge factors that are pulling oil prices up. The first is that the United States inauguration of Donald Trump is only a few days away. Mr. Trump has a very pro-fossil fuel administration, which means that emphasis is going to be placed on helping the industry thrive.

The second is that the current cuts by both OPEC and non-OPEC producers are being enforced, so far at least. This means that there will be a decrease in supply and an increase in demand. Some experts are forecasting that oil prices will once again soar as high as $100 per barrel. For people who have been holding their investments through this bearish market, and those who are investing during the current slump, a price jump to that level is welcome news.

A Few Questions Remain

Even though there are some good indicators that oil prices are going to climb this year, there are still a few questions that remain. As it stands now, the dollar is the only global reserve currency, which means that as the Fed increases the interest rate, the market feels the pressure and some prices fall. If the dollar is no longer the only global reserve currency, market prices might not feel the pressure of the Fed’s interest rate adjustments. This wildcard could drive oil prices up enough to top $100 per barrel in 2017.

Of course, there is nothing certain at this point. Potential investors should carefully weigh their goals with current uncertain risks before making a decision regarding an investment in oil.

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