Oil – Brent

Bent Oil is extracted off the coast of Europe, which means its demand is closely linked to the economies of Europe and Africa, as well as the global economy. The price of Brent crude is affected by a variety of factors similar to the WTI benchmark.

• To understand what drives oil prices, you need to understand the issues affecting both supply and demand.
• Demand is driven by the level of economic activity around the world, or more specifically, expectations around future economic growth. That means consumer spending, industrial activity, interest rates and inflation are all important factors to consider.
• Demand: When the global economy steadily increases there is more demand for oil. However, it is important to remember that markets are always looking towards the future, therefore, the price of oil will reflect the expected growth of the economy. The growth of the economy boils down to consumer confidence, inflation levels, interest rates, and political and economic events.
• Supply: The Organisation of Petroleum Exporting Countries (OPEC) has always had very tight control over the production and supply of oil, more recently this grip has been seen to have loosened but that is not to say that governments, businesses, speculators, consumers, and traders around the world still keep a close eye on OPEC's every move. OPEC's supply policy can be majorly influenced by political tensions and events occurring between countries, this will inevitably then cause the price to shift.