Crude oil prices influence and are influenced by a multitude of domestic and geopolitical factors. Knovamind's proprietary algorithm matrix weighs these factors with crowd behavior, technical analysis and optionality. Price probability has proven significantly ahead of the curve.
Importantly these factors are ever shifting by influencer weightings and relative importance or beta changes over time.
The main factors that influence crude oil prices can be grouped into these broad categories:
- Global demand for crude oil and its by products
- Perceived global demand for crude oil from advanced and emerging nations. Particularly economies such as China and India.
- Inventories of global crude oil and petroleum products
- Expectations of future crude oil supply and consumption
- Political influence or agenda, example would be the US Iran deal in 2015
- Potential for actual crude oil supply and consumption to differ from expectations
- Crude oil based ETF demand such as USO
- Geopolitical influences in particular Middle East, Russia, Africa & china
- Crowd behavior, bearish or bullish extremes. Herd bullish at $120 bearish at $25 for example
- Fossil versus Renewable or Green energy source politics, demand, branding
- The foreign exchange rate, the majority of crude oil is traded in US dollars
- Force Majeur events, such as war, accidents or natural disasters.
Main Crude Oil Futures Contracts
1. West Texas Intermediate (WTI) traded on NYMEX (CME)
2. North Sea Brent traded on Intercontinental Exchange (ICE)
Each contract is for 1,000 barrels of oil. The bulk of activity is on oil for delivery in the next three months.