Why is the oil price failing?

There was a great and simply explanatory piece in Saturday’s Guardian. Read it here, but in brief:

  • project demand has been scaled back because of economic worries in the US, EU and even China
  • supply has been picking up as OPEC members beefed up production to capitalise on the high price
  • Geo-political worries (like Nigerian unrest) have eased
  • The dollar is rising again which helps: oil is priced in dollars so companies selling in other companies push the price higher to compensate for the slide in the currency’s value
  • Hedge funds are getting out because of the above

Simple, no?

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