Whoever says he knows where crude oil will be trading in one or two weeks, don’t listen! No expert can make any accurate short-term predictions as we’ve been experiencing extreme fluctuations recently.
Crude oil prices have been on the move in the recent years, but what we saw in the last couple of weeks is unprecedented. We saw oil prices falling from their all-time high of $147.27 per barrel in July to about $90 per barrel last week. Then it rose sharply, and completely unexpected to $130 a barrel on Monday. Monday’s $25 gain was the largest single-day price increase ever for crude oil. Today, crude oil is trading at about $105 a barrel. These hefty fluctuations are not at all backed by the fundamentals of supply and demand – though the long-term price increase can be attributed to growing demand and limited supply. Given these fluctuations, no serious analyst can make a crude oil price forecast for the short term.
The reason why oil prices came down again the last few days is mainly the uncertainty about the steps the administration is going to take in order to stabilize the financial markets. With the turmoil going on at Walll Street, investors pour more money into commodities. After the end of the last remaining investment banks in the United States and the acquisition of Washington Mutual by J.P. Morgan Chase, commodities seem to be a rather safe investment. Investors know that the price of oil is almost certain to rise in the foreseeable future. We are at the beginning of an energy crisis that the world has never before experienced. This means lots of challenges, need for change and last but not least, a whole bunch of opportunities! Western countries have to take the lead in energy technology as this can become the key to future growth, stability and wealth. Which economy can afford living with today’s dependence on foreign energy supplies and the unpredictable price fluctuations. Alternative energy sources will stabilize the price and price fluctuations will become rare. Moreover, the costs of these green technologies are gradually coming down. That’s why we have to get involved into this exciting and promising industry.