The stock market does not affect crude oil prices at all, according to Forbes. Instead, the forces of supply and demand influence the price of this commodity, which translates to prices at the gasoline pump.Continue Reading
The global economy depends heavily on oil both for status quo functioning as well as future growth, reports Forbes. Emerging economies, such as China, and existing global leaders, such as Europe and the United States, provide much of the demand for oil. While demand has softened in both the United States in China, it has not softened to the point of a recession.
Stock price increases in the United States and Europe have not translated to a solid economic recovery, which is why demand remains soft in those regions, notes Forbes. As China changes from an economy driven by exports to a service-based economy, demand is softening there as well. Such positive metrics as gross domestic product growth, unemployment rate improvement and profitability in corporations indicate that the stock market and oil prices are largely independent.
Recent innovations in technology are driving oil supply upward, as stated by Forbes. The ability of U.S.-based companies to extract shale oil has made the world much less dependent on Middle Eastern oil. As of 2015, the United States produces about 9 million barrels per day, almost twice as much as 2008 levels and the most the United States has produced since 1975. As long as supply remains high, prices remain low, and OPEC is hoping that the American companies stop their production because of low profits, which is a factor that has nothing to do with stock markets.Learn more about Business Resources