Why does oil fall? The price of oil is falling: causes, consequences

Why does oil fall in price? This issue is of concern to many experts, since the cost of fuel on the international market leaves an imprint on the economy of most countries of the world, especially Russian. From September 2014 until March 2015, there was an active drop in fuel. After a slight lull the price again went down. If we consider the situation from the point of view of the theory, then the natural resource, which is classified as exhaustible, should go up from year to year. But because of a certain confluence of circumstances, the price of fuel on exchange markets came under the influence of politics.

The situation

To understand why the oil falls, a detailed assessment of the situation in the market will help. In June 2014, nothing foreshadowed the disaster, and the price for a barrel of "black gold" reached a mark of 115 dollars. Most analysts were confident that at the end of 2014 the price would close at $ 110. Even state analysts did not doubt this development of events, since the cost of fuel in the amount of $ 100 was put in the budget of Russia.

Against the forecasts for the next 6 months, all market participants were able to observe a colossal drop in fuel. The charts reached a two-year low and confidently moved towards the 2008 indicators. The minimum was reached in February at around $ 47.09. Despite the fact that the OPEC countries proudly declared that they did not fear the reduction of fuel up to $ 10 per barrel, below the mentioned mark, the market was not allowed to move. So, starting from February 2015, the reverse growth of raw materials started. Today, the cost of a barrel of oil is $ 63.69.

Forecasts, forecasts

Just a couple of months ago, the leadership of many states clutched at the head, puzzling themselves with the question of why the cost of oil is falling. The situation did not promise anything good, since the quotes were rolling down without stopping. Experts, understanding the situation, constantly insisted that nothing serious was happening.

In the winter of 2015 there were talks that by the beginning of the summer the situation was stabilizing. The fall in fuel by 40% per year is not comparable with the global drop of 75% during the crisis in 2008.

The OPEC meeting in early spring provided a partial answer to the question of why oil is falling. It's simple: the offer has exaggerated the demand. Despite the fact that the situation should not have changed until the next meeting of the states, which is scheduled for June 2015, the world market participants could observe a positive pullback of the fuel price by about 20%. It can be said that the pressure on fuel from political factors has slightly decreased, and the forecast for an increase in the cost of a barrel to $ 65 by the end of 2015 can be called quite real.

What caused the fall of the oil market?

World oil market experts, analyzing the question of why oil is falling, came to the conclusion that several factors simultaneously influenced the situation. Because of the saturation of 2014, political and economic world events, it is problematic to single out one prerequisite for the reduction of quotations. You can talk about the beginning of the slate revolution in the territory of America. Since 2008, the state's fuel production has increased by 4 million barrels per day. It is worth saying that a little earlier the USA was the biggest consumer of "black gold".

The change in the country's policy led not only to an increase in fuel volumes in the market, but also to a significant reduction in demand for it. You can talk about sanctions from the EU, imposed on Russia. Not the least role in shaping the situation was played by the return to the oil market of Libya and Iran.

The fall of oil: a surprise or a thoughtful policy?

Even at the end of the winter of 2015 it was impossible to dispute the fact that the cost of oil is falling. The reasons for this phenomenon experts found in various aspects of the development of the world community. Very popular theory, according to which the decline in quotations is an attempt by Saudi Arabia to drive the US out of the market. The country, being an industry leader, is able to exert a significant influence on the market. Not wanting to lose its customers, preferring to retain leadership, Saudi Arabia lowered prices to the level of the cost of production of fuel in America, which was accompanied by the closure of a number of companies in the US. In particular, Venezuela did not support its partner and would prefer to reduce production volumes to reduce costs.

What does technical analysis of quotations mean?

Considering the dynamics of the schedule, the question of why oil is falling is being pushed into the background. Experts are more interested in where the movement will go next.

Even at the end of the winter of 2015, speculators were guided by a strong level of support, located at $ 36 (the price of 2008). It was from him that the purchases were planned. It was expected not just touching, but good testing up to a figure of 30 - 33 dollars, which was caused by a possible panic. But the situation played a little differently. The price reached the level of $ 47, turned around and went up. At the moment, there is a good growth potential. The most positive predictions suggest that by the end of 2015 the price will close at $ 85 per barrel, or even more. I would like to say that large analytical agencies and world banks, despite the emerging upward trend, expect another fuel trip down the eve of growth to the predicted values.

The new format of the commodity market

If only a few years ago the answer to the question of why the oil is falling was given quite simply, today even short-term forecasts are very inaccurate. This is due to the fact that the real goods turned into "paper" assets. Active trade in contracts and futures is conducted. Commodity volume of raw materials is only 5%. If we take into account the situation in the world with the weakened economies of many countries and with the problems of Russia, which is the most powerful supplier of fuel, the collapse of pricing can be explained.

Raw materials economy of the Russian Federation: sensitivity to price changes in the international raw materials market

Since 1999, Russia's economy is actively developing. Since 2003, the state owes its prosperity to the growth of world prices for energy carriers. Favorable circumstances helped repay foreign debt and form a stabilization fund. A number of social problems have gone into oblivion. In the past, the advantage, and today the shortcoming - is the country's direct dependence on raw materials and the inability to replenish the budget from other sectors of the economy.

In 2014, the budget was formed due to the increase in profits from the sale of energy resources by 1 trillion rubles. Without attention, there was a decline in revenues from other sources by 300 billion rubles. This explains the government's anxiety caused by such a question: "Why does oil fall, the dollar is growing?".

Who suffered as a result of a sharp decline in prices?

A sharp decline in the cost of oil in the world market caused cataclysms in the economies of commodity-type states. Russia has become a vivid example of the direct impact of the situation on the commodity market on the economy. When the fuel was confidently heading for its lows, and experts were examining the question of why the demand for oil is falling, the country could observe an increased demand for foreign currency, a crisis in the banking segment and a sharp deterioration in the living standards of the population. It should be said about the high risk of ruble devaluation. Today, the state feels more confident on the oil price rollback, but until the raw material model of the economy is sent to the past, it is too early to speak about the favorable development of events.