2006 was the year of crude oil. The statement may look sarcastic but its true in literarily sense. Throughout the year speculators were optimist that in no time price of sweet crude oil will reach magic figure of 100$. Hedge funds, private commodity market funds and numerous small time investors queued to get a piece of that expected price appreciation. Then the time came and like any other overheated market crude price crashed. Some of the funds lost their shirts.
Inflation in crude price also raised question of economic vulnerability globally, many people chewed their nails in thinking what could be possible effect on business if situation persists. The reasons behind such international anxiety following any appreciation in crude price are mainly two folds –
· Alternative energy usages are still in nascent stage
· Price trend in crude oil hardly follows economic fundamentals
It’s the second factor that’s disturbing most. Nobody, out side the producing countries, has access to the actual database regarding actual storage of crude. These are recognized as safeguarded information. And that’s the major problem. As no body knows, how much of crude oil our planet is still holding, it becomes difficult to fathom actual supply potentiality and market moves on short-term political and geographical disturbances.
Same thing is again building up in Iran. Some small time political disturbance is again ready to heat up crude price. If Iran stays affirm on its stance and decline to accommodate UK authorities in military detention case, already politically disturbed West Asia may get into another air pocket. Crude price has already reacted positively to this issue and in future we can witness some more bumpy rides.
