Crude oil current rate can be defined as the actual conversion rate or selling price of crude oil trading on an exchange including the most recent price of the crude oil listed in the forex market. Crude oil current rate is said to be a method of crude oil translation where its record in the financial statements are translated into currency exchange rates in the forex market.Crude oil is a commodity and because of this, it tends to experience larger rates of fluctuations than a regular currency. Crude oil is seen as a purely elastic commodity which have a high demand on the production and consumption industries with reflections on the ultimate price.
FACTORS THAT DETERMINESCRUDE OIL CURRENT RATES
SUPPLY AND DEMAND
Basic supply and demand principal states that the more a given product is produced, the lower its selling price at all circumstances while the more a product is limited, the higher it’s selling price. This theory is a symbolic dance in that the reason why more products were produced in the first place is primarily because it became more economically effectual to have more. This only means that as crude oil demand increases and supply decreases, its current rate also increases while as demand for crude oil decreases and supply increases, its current rate also decreases.
The world’s largest influencers of the crude oil current rates are the market forces of the 13 countries which make up the Organization of the Petroleum Exporting Countries. This Organization of the Petroleum Exporting Countries was established in the 1960s in other to sates crude oil prices. OPEC had the ability to force crude oil current rate and prices to rise or decrease and by this means enjoying higher profits than every other member countries had participated in the crude oil sell on the forex market. The OPEC have a single mission which is to certify the stabilization of the forex oil market in other to safeguard an effective economic and consistent supply of petroleum to various consumers. By this, the Crude oil current rate have been seen to be at 100 dollars for a barrel in mid-2014 and as the cost of crude oil fell, it began to be sold for just 50 dollar.
In conclusion, unlike other forex commodities, Crude oil current rate are not totally determined by the factors of demand, supply and market forces towards the physical products. Somewhat, supply, demand and market forces towards oil future contracts which are traded mostly by forex market speculators play a great role in Crude oil current rate determination. Moving trends in the forex commodity market also plays an important role. Without much emphasis on howCrude oil current rate is determined, based on its use in production and consumer industries it seems that crude oil will always be in great demand for the future to come.
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