Why has the price of oil hit a 10 month high?

The price of a barrel of oil has hit 74.36 USD which is the highest since October 15 2008.

The weakening of the dollar has also led to the higher run up of crude oil prices. As oil barrels around the world trade in dollars, the weakening dollar implies that oil prices are cheaper for traders having stronger currencies.

The main reason for price fluctuation in the commodity market is speculation. In present day world speculators purchase nearly 66% of oil future contracts that has led to huge fluctuations based on gut feel of investors. These speculators purchase huge amounts of oil and this commodity exchanges hands a number of times before it is delivered.

The cause of high price of oil is the presence of positive expectation in the mind of speculators. When the future prices of a particular commodity is higher than the current price than the owners tend to hoard a particular commodity thus bringing down the supply which pushes the demand thus increasing the current prices.

But analysts predict that it will be difficult for a barrel of oil to maintain the current highs. The major reason for this is the fact that the dollar is slowly but surely recovering from the lows it hit a year ago. There are already signs of the economy recovering from the recession which is reflected in the quarter results that have announced by Multinational companies. Also the manufacturing output across the globe is improving and hence there is every chance that the price of a barrel of oil may come down in the near future.

Related Links

http://en.oboulo.com/what-are-the-causes-and-consequences-of-the-current-us-63229.html

http://en.oboulo.com/disparity-between-the-dollar-and-the-euro-61332.html

http://www.forexyard.com/en/market-analysis/commodity/crude_oil_hits_10-month_high__then_tumbles-2009-08-10

http://timesofindia.indiatimes.com/Oil-price-hits-10-month-high/articleshow/4858156.cms