What Factors Are Affecting Oil & Gas Prices?

By: Kyle Jobin
Submitted: 2007-01-17 16:25:23
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As with any commodity, prices for crude oil and natural gas will move according to a number of factors. Some of the larger indicators include: geopolitical positions—mainly in the middle east, weather related outlooks, and of course supply & demand. In recent weeks, we’ve seen positive outlooks in all of these categories; negotiations with Iran have appeared positive, the hurricane season looks to be ending on a mild note and oil & gas inventories are at a high level. Lead by strong inventory reports, this “tri-factor” of encouraging news has helped reduce prices from their all-time highs experienced over the past year.

A recent article in the Wall Street Journal titled “A Slippery Debate Stirs in OPEC” discusses current issues facing the cartel’s supply of crude oil. The article shows how inventories have remained high due in part to over production by some of the major OPEC members such as Algeria, Kuwait, Libya and Saudi Arabia. Major discussions within OPEC appear to hinge on expected production cuts. How OPEC plays the market is crucial, as the cartel provides one-third of the world’s oil supply.

Beyond OPEC asking member countries to cut from current production, they may also ask nonmember counties such as Mexico and Norway to restrain their output in times of falling prices. In 2004, when oil prices fell 26% between October and December, OPEC reduced supply by one million barrels a day, according to the WSJ. Trading prices are currently down approximately 20% from their high in mid-July. With all that said, it’s nearly impossible to predict futures. But, do you think oil producers would like to maintain higher pricing?

Kyle S. Jobin is a Vice President at 1031 Exchange Alternatives™. He attained a Business Management degree from Kettering University (formerly GMI) in 2000. Before joining his family at 1031EA Kyle contributed 5 years in automotive product development, sales, quality assurance and environmental compliance. As an automotive supplier, he managed the launch of numerous multi-million dollar contracts from prototype to full production. He is a licensed securities agent (series 7 & 63 licenses) and a registered representative of SIGMA Financial Corporation, member of NASD & SIPC. For more information call 1-800-466-2003 or visit http://www.1031ea.com.

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