It’s Not All About Supply And Demand

As we and others have noted, watching oil and gas prices has become an industry hobby.  So too has the effort to immediately link cause and effect.  As in, "Oil was up today.  Were rig counts down?  Were production numbers announced?"

Of course, in reality we know short-term fluctuations often have few direct causal factors while, on the other hand, long-term price variations can be attributed to a number of factors including, but not limited to:

• Production, domestically and internationally
• Anticipated demand, which itself can be influenced by:
  • Weather
  • Domestic and international economic data
  • Expected demand for goods and services
• Geo-political issues, particularly in volatile areas in Africa, Latin America and the Middle East