Oil prices decline is the consequence and part of all comodities prices decline. Starting with mining commodities descending trend reached hydrocarbones. The oil price is artifical and does not obey known Rent laws, i.e. when there is a shortage of some resource the price is maintained by the cost of production of most expensive producers. Now the most expensive oil producers are shale and tar sand explorers. Major of them are profitable with price near approx. $75.
Why the oil price was above $100 long before? To address weak dollar issue the financial institutions over the World hedged their risks buying derivatives on commodity indexes. That was driving prices higher.
Now in the verge of withholding QE program the dollar is going to be stronger. The dollar has already got stronger against number of currencies for last two years.
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Date: 29/10/14 19:29 (UTC)Why the oil price was above $100 long before? To address weak dollar issue the financial institutions over the World hedged their risks buying derivatives on commodity indexes. That was driving prices higher.
Now in the verge of withholding QE program the dollar is going to be stronger. The dollar has already got stronger against number of currencies for last two years.