Why have oil prices dropped recently?

Question

Over the past few weeks oil dropped from $147 to 124. What caused this?

Answer 1

it's those d**n speculators again - I hope the democrats outlaw them like they promised

Answer 2

Oil demand in the United States hit its lowest level in five years in the first half of 2008 and recorded the steepest rate of decline in 17 years last week.

And that decrease in demand is showing up in falling prices for crude oil.

Market momentum has speculators driving the price down. Inventories are up. Alternative energy is going to decrease the demand for oil. What's going to be interesting is the demand for natural gas. Natural gas burns clean.

Answer 3

They want us to think that we aren't getting scammed so they mess with the prices a bit.  Make it look like its up too chance, but they still make a 500% profit or something.

Answer 4

Tmac ... "ES" gave you the best answer ... although sort of in reverse since you asked why the prices dropped.  He is right about why they went up ... just look at his answer and you'll understand why they are going down.  Take "decling US dollar".  Well, now the dollar is gaining strength.  However, I'll add one more item.  Always remember that the price of any commodity is about supply and demand.

I think speculators, oil companies, and everyone involved in that sector realized that the largest user of oil in the world (that would be us ... the Americans) finally balked at $150 per barrel oil prices.  Those that drive the oil prices worldwide sat around and went, "OMG!  They are using less oil!  They are thinking of developing a real energy policy!  Yikes!  They might even use their techs skills and massive brain power to come up with cost effective alternative energy!"

So the prices fell ... for that reason and all that ES mentioned.  Hope this helps.

Answer 5

The chinese are reducing the gas subsidy which kept their pump prices around $1.50 per gallon.  As the price of gas in China corrects to free market levels, the chinese consumers will use less.  Today's report on inventory levels show that inventories are growing.  The price is on the way down.  Eventually there will be enough affluent chinese to buy every drop of oil in the world.  Might as well learn to plug in now.

Answer 6

You got some bum answers! There are several factors that drove oil prices higher:

1. Declining U.S. dollar;

2. Greater use by developing nations;

3. Political unrest in Iran and Nigeria;

4. Inability of current oil producers to increase production substantially. (Mexican, Venezuelan, North Sea Crude, American oil production is shrinking.)

5. Some speculation ( this is reason affects price the least);

6. Poor long term energy policy by the federal government of the USA.

7. Oil producing nations keeping more oil at home and giving it to their own people at subsidized rates.

I hope this explanation helps. If you go on www.seekingalpha.com, you can find many interesting articles on the factors that moved the oil markets. Good luck!