My knee jerk response to this question is “what doesn’t?” There are numerous factors that drive the petroleum prices daily, minute to minute and even every second. However, the basic driving factors are SUPPLY and DEMAND. Within those topics are too many micro factors to list, all of which influence price. We will dive into the basics below, but a reliable source to go deeper into this valuable information is the U.S. Energy Information Administration at www.eia.gov.
Consumption: The using up of a resource.
Production: The making or manufacturing from components or raw materials.
Trade: Imports, or the bringing of goods into a country from abroad and exports, sending goods to another county also affect petroleum prices. Net imports is the difference between gross imports and exports.
Financial Markets: Futures contracts (or legal agreement to buy or sell a particular commodity, asset, or security at a predetermined price at a specified time in the future) for both gasoline and distillates grew substantially over the past decade. The activities of multiple trading categories including physical participants (producers, merchants, processors, and end users), money managers (hedge funds and sophisticated traders), and swap dealers (investment banks or commodity broker/dealers) all affect the financial markets.
Balance: Seasonal consumption.
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