CRUDE PRICE SWINGS - THE STRUGGLE TO BALANCE THE MARKET
Summary
This paper, "Crude Price Swings," delves into the history of the global oil market, focusing on the factors that have led to dramatic price fluctuations. It examines various eras, starting from the early days of oil production in the 1850s, through the rise of Standard Oil and the Seven Sisters, to the formation of OPEC and the shale revolution in the United States. The text emphasizes the interplay of supply and demand, particularly the impact of storage levels, geopolitical events, and economic growth on oil prices. It explores the role of key players, like OPEC, the Seven Sisters, and individual countries like Saudi Arabia and the United States, in shaping the market. The document also analyzes the relationship between crude oil inventory changes and spot prices, highlighting the inverse correlation between the two. Notably, it explores the phenomenon of negative oil prices, a historic event that occurred during the COVID-19 pandemic, demonstrating the market's sensitivity to extreme shifts in demand. Finally, the text concludes by examining the long-term economic effects of oil price gyrations, emphasizing their significant influence on fuel industries, manufacturing, and global economic growth, especially in oil-dependent countries.