why crude oil prises declins

For crude oil there is little hope of near term price stability. The worldwide financial market meltdown has contributed to a slow down in oil demand as economic activity decreases. This slow down in demand is offset by a continued decline of crude oil production at the world’s major oil fields. The long term growth in oil products demand in high growth rate countries like China, India, and Brazil, will keep crude oil market supply and demand closely balanced. Even in the US the economic slowdown has only marginally decreased the consumption of crude oil and refined products. This will keep crude oil markets extremely volatile as small changes in supply will have a large effect on price.
 
The fall in crude can be attributed to fall in demand and fall in demand is because of the financial crisis.Moreover,the oil trading in markets has also come down because open market prices are very cheap and most of the Airlline companies would have hedged when the crude was trading at $150-200/bbl.OPEC countries are reducing the supply due to weak demand.

-Deepak.
 
For determining of price of any commodity two subject work. ist is demand and second thing supply. if the demand of product is less then its supply, the price of product will decrease and vice- versa.
Because of US Crisis there was decrease in demand of product and consequence of oil and it effect the price of crude-oil.
and the second thing no body no about when crisis will overcome. it depends also condition of US.
 
The major reasons for the reduction in oil prices over the time are:-
1) weaker global growth.
2) poor demand
3) dollar became weaker in comparison of rupee at that time, so import automatically became cheaper as less INR is spend to get oil as trading is done in USD, and when INR is stronger in comparison of USD, so oil cheaper.
Improvement in market comditions:-
1) this is the era of globalization, so all the economies(country's) re interdependent on each other.
2) the way recession started simultaneously in all economies, same way it will go away.
3) the STIMULUS PACKAGES and other POLICIES introduced by various economies, are merely like a ASPIRIN for their econoies, they can give relief to the nation for some time, but ca't be permanent solution to this crisis.
4) for INDIA, may be for the next 1-1.5 yrs there's less chances of improvement in market.
 
vikrantverma said:
The major reasons for the reduction in oil prices over the time are:-
1) weaker global growth.
2) poor demand
3) dollar became weaker in comparison of rupee at that time, so import automatically became cheaper as less INR is spend to get oil as trading is done in USD, and when INR is stronger in comparison of USD, so oil cheaper.
Improvement in market comditions:-
1) this is the era of globalization, so all the economies(country's) re interdependent on each other.
2) the way recession started simultaneously in all economies, same way it will go away.
3) the STIMULUS PACKAGES and other POLICIES introduced by various economies, are merely like a ASPIRIN for their econoies, they can give relief to the nation for some time, but ca't be permanent solution to this crisis.
4) for INDIA, may be for the next 1-1.5 yrs there's less chances of improvement in market.
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i agree with my friend's comprehensive view on this topic and would like to add a point or two to it.
Oil prices rose on account of speculation by traders in forward markets, which was fuelled by cheap money and the irrational exuberance shown on ever-increasing consumption coming from china, india and other emerging markets.
Now once subprime crisis took shape of full-fledged global financial crisis - demand from these emerging markets took a nose-dive, easy liquidity evaporated and thus traders were all gone.
 
the current meltdown of giant economies like US,UK the demand for the crude have been simultaneously declined and i think it will take almost 2-3 years for stabilization of economies and once the demand increases the prices will be under control..
 
Its all the global recssion due to which the economies which have done really well have been hit badly at this point of time just like IT and Finance.
 
its is very simple economics, Demand and supply factors plays major role, when there is major production activity goes on, it required maximum energy, so the energy (crude oil) need increases, creates huge demand for crude oil, and rise in price of crude oil. The speed of rise is done with the help of derivative products. When the production slows down the need for energy also slows down creating the decrease in the crude price
 
well one of the possible reasons for slashed crude oil prices is, the ramification incurred by the global downturn. The OPEC countries had been asked by the US president to slash down the crude oil prices and cut down their profit to contribute towards the stability of victim countries.
 
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