Top Factors That Determine the Price of Crude Oil

As practice shows, not a single analyst can predict global price changes caused by force majeure, but this is not a reason to abandon the analysis of current events and forecasting the development of the situation.

In this regard, energies trading participants who want to make a profit and avoid large financial losses should monitor the actions of politicians and correct the strategy according to the situation.

Take a look at the main reasons that produce impact over the crude oil prices to trade successfully-only the best experiences when trading oil with Exness!

Main Factors that Influences the Price of Crude Oil

There are 5 factors in the oil market that can significantly affect the cost of oil, and it is they that should be given the main attention:

US Government Action Against Oil Companies

Since taking office, current President Biden has taken a number of actions that have had an impact on the international market. These include:

●       Investment in the development and production of electric and gas-fueled vehicles

●       Construction of wind power plants

●       Temporary suspension of the issuance of licenses for drilling and oil production on federal lands.

OPEC + Actions

In early March 2021, OPEC+ decided not to change the production levels of all OPEC + member countries that were allowed to increase the amount of oil produced.

Reducing the Volume of Air Traffic

Growth in demand for oil is hampered by a significant decrease in the number of air travel caused by the pandemic and the travel ban.

Now that the pandemic has subsided and the number of vaccinated people around the world is increasing, air travel is starting to increase, increasing demand.

The Economic Crisis Second Wave for the Oil Producing Countries

Economic support measures should mitigate the pandemic's detrimental impact, but a new economic downturn is also likely to emerge.

All countries of the world have suffered damage, some of the consequences of which may not become visible until the end of the year or in 2022.

Commissioning of New Crude Oil Deposits

In 2014, after the start of falling oil prices, many oil companies cut investments in the search and exploration of new fields. In 2020, most of the major oil producers admitted that continuing capital investment is unacceptable for them.

So, be sure to mind these reasons when you decide to trade crude oil with the Exness broker.

Main Recent Ups and Downs of Oil Price

Just in the beginning of 2022, after an initial rally, oil corrected from the highs to hit a ten-day low of $84.20 a barrel before rebounding 200 points back above $86 by the close of trading.

Oil ended up solid gains for the second month in a row, and much of the players' optimism is fueled by the realization that Omicron is not putting as much pressure on demand as many feared in November 2021, when the new virus first emerged.

This picture is complemented by a shortage of production capacity within OPEC +. Due to these fundamental drivers, the market allows itself to ignore more and more obvious hints of a full-fledged fall in Wall Street and the prospect of an even more aggressive Fed rate hike than previously thought.

Bursts of impulsive purchases of futures are now reinforced by the geopolitical factor. Watching the situation in relations between Russia and the USA, traders are cautiously pricing in possible interruptions in Russian oil supplies to Europe.

In the event of an aggravation of the situation on the geopolitical front, a puncture of the psychological mark of $90 per barrel is not ruled out in the coming week.

However, a correction cannot be ruled out if, in response to the Fed meeting, a wave of sales will overwhelm risky assets.

In case of intensifying selling, attention will be directed to the ascending 20-day moving average, which is now located slightly above the $83 level.