MARKET ANALYSIS

OIL

Oil, often referred to as black gold, can be found in many forms but the most prevalently consumed is Crude Oil. This is a naturally occurring, unrefined product composed of hydrocarbon deposits and forms the fuel for everything from petrol and diesel to other forms of petrochemicals.

Oil prices have in recent periods become a very volatile commodity due in part to increased demand and conflicts in the main refining region, the Middle East.

Oil price shocks are said to have a stagflationary effect on the macro economy of an oil importing country because they can slow down the rate of growth, reduce level of output because of increased price levels and thus potentially result in an increase in the inflation rate.

An oil price hike can act like a tax on consumption; however, the benefits of this tax go to the major oil producers instead of the country’s government. The main oil data is the US Crude Oil Inventories which are released weekly.