Oil prices and exciting figuers.

Today I read one article in a magzine, and I came across some important facts and figures which made me use my brain for brain storming...

We all know that all the prices are decided by the demand and supply forces. In 2008, oil prices touched its all time high of $140/ barrel. there were many reasons given by different sources of media and economists. but some of the reasons i found interesting in the article are as followes..

1) Since Aug 2007, The Bush govenment had been adding 50000 barrel a day to US's STRATEGIC PETROLIUM RESERVES (SPR), which is its emergency stock pile. In september 2008 US SPR was 700 mn barrels which is enough to keep US economy running for 56 days if imports suddenly stops. So stock pilling has added 10% to price of crude oil.

2) From 2003- 2007 6.6 mn barrel/day demend of oil has increased in which China contribued 30%,Mid-east countries 21%,US 11% while India 5%.

On an average each year the oil damand has increased by 1% but prices grown by 92% in $ terms.

3) Weakening of $ against most of the other currencies.

4) perception of the market about the weakening of Dollar will continue, gave rise to high trading in future contracts. And as future contracts are indicators of future spot prices, it again made impact on rising oil prices.

5) OPEC countried reluctant to go for high expansion plans due to crash in 1990's , although demand is rising.

6) Geo political risks- conflicts wars also making OPEC countries reluctant to invest in expansion plans.

So this artical made me think on the whole how different events in the world directly or indirectly affects the price of the commodity.