Why does the price of crude oil futures fluctuate seasonally?


Quick Answer

The price of crude oil fluctuates seasonally due to supply and demand, OPEC influences, political unrest, geopolitical crisis, production, and natural causes, according to The Economic Times. Secondary causes include financial markets, inventory, restrictive legislation and the exchange value of the dollar. Some factors tend to affect crude oil prices directly, while others affect the prices indirectly.

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Full Answer

As demand for crude oil continues to rise from developing economies, the supply remains intact, which results in a deficit. This results in a hike in prices. Natural factors such as hurricanes contribute to fluctuation of crude oil prices, explains The Economic Times. OPEC nations produce approximately 40 percent of the world’s oil. Therefore, OPEC has the power to control the prices, since any decision it makes to increase the prices affects crude oil prices globally, ascertains OilPrice.com.

Geopolitical unrest tends to have a significant impact on the fluctuation of crude oil prices. Political hostilities affect energy infrastructure, which affects the supply of crude oil negatively, Energy Digital explains. What is more, political unrest in oil-producing countries results in reduced production, deficits in supply and subsequent price fluctuations. One factor or several factors acting together may result in the fluctuation of crude oil prices.

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