Has the world seen the last of sub /bbl oil? What is guiding the new crude price?
Do we really know how to forecast or do we rationalize after the fact?
In today’s world of + crude and the recent oil bust still relatively fresh, questions like these abound in the minds of the average consumers, companies that depend on oil for their business, nations across the world and the global intelligentsia. It would not be an egregious mistake if we rate energy and consequently oil price as one of the top topics in the world today at par with world peace and global warming.

Has the world seen the last of
sub $30/bbl oil? What is
guiding the new crude price?
Do we really know how to forecast
or do we rationalize after the fact?
In today’s world of $70+ crude
and the recent oil bust still relatively
fresh, questions like these abound in
the minds of the average consumers,
companies that depend on oil
for their business, nations across the
world and the global intelligentsia. It
would not be an egregious mistake if
we rate energy and consequently oil
price as one of the top topics in the
world today at par with world peace
and global warming.
While much has been said and
continues being contemplated about
the future direction of the oil price,
this article focuses on the underlying
factors that drive oil price. More
precisely, we explore the changing
global business dynamics of oil
or what we call here the oil price
“stakeholders” and their impact on
the underlying price factors. We
investigate how the underlying price
factors have behaved traditionally
and the departure from their traditional
behavior responding to the
changing global business dynamics
behavior of the oil price as it shifts
from its past equilibrium range to
the new paradigm.

Historical and current trends

Before discussing the behavioral
changes of the underlying oil price
factors, let us explore the changing
global oil business dynamics or oil
price stakeholders that have spurred
these changes. Growing demand
of oil. We present the composite
effect of this changed behavior of
the underlying price factors and how
that has prompted the movement
towards a new Oil Price Paradigm.
The new Oil Price Paradigm
discussed in the article does not
predict a certain future price of oil
but demonstrates the new ecosystem
and equilibrium range in which the
oil price is projected to reside. The
article also presents the transitional
behavior of the oil price as it shifts
from its past equilibrium range to
the new paradigm.

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