Market Fundamentals Most Important Factor in Current Market

Currently, uncertainty in the global crude market regarding geopolitical issues, refinery shutdowns and increasing global demand, as well as devaluation of the U.S. dollar, are clearly having an impact on the assessment of market fundamentals.  One may view such factors as contributing an uncertainty or risk premium to the usual analysis of supply and demand data.  Such factors may now fairly be viewed as part of the new fundamentals of these commodities, and are attributable to the rise in oil prices.  Further, other demand and supply fundamentals in the oil markets are factors in high oil prices.  For example, global demand is exceeding supply by one million barrels per day.  As a result, a market with highly inelastic demand will need to equilibrate through a substantive rise in price.  Therefore, the demand and supply fundamentals in the oil markets continue to be the driving factors in high oil prices.