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Oil prices have begun another up-trend. After falling all through the summer and into September, the price of West Texas Intermediate crude oil (North America’s most followed barrel of oil) rallied this month, eventually crossing above US$90. Oil stocks got a boost from the rising price of oil, making their first prolonged gains since June. Will the latest oil price rally continue? It’s hard to say looking ahead, but my feeling is that it will probably will. There are a number of factors occurring right now that are pushing oil prices higher. These factors aren’t guaranteed to prevail over the long term — there are many different variables influencing the price of oil, and other factors could overpower the ones I’m about to mention. However, they are worth thinking about. OPEC cutting output by two million barrels per day The biggest sign that oil prices will be strong in the months ahead is the fact that OPEC (a cartel of Middle Eastern oil producers) is going to be reducing its oil output by two million barrels of oil per day. Oil prices are a function of supply and demand: the less supply, the higher the price if demand doesn’t […]
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