This chapter examines crude oil prices from the perspective of two fundamentals. Oneis supply-and-demand balance and the other is a geopolitical factor. They are the basicfundamentals of crude oil price. This fact is straightforward to understand: Supply-and-demand balance largely dictates virtually all commodity futures price. While the strategicrole of oil for almost every country determines that oil price is bounded to be tied tightlywith the geopolitical factors.Few will argue that the recent decades are interesting times for energy industry. Thisobservation is true for both traders and investors. On the traders' side, for example, thederegulation of natural gas in the United States in the early 1990s is slowly butinexorably moving into Europe and Asia. Natural gas deregulation has strongly fosteredcompetition, as well as called for needs for risk management. On the investors' side, asignificant phenomenon is that for many of today's hedge funds, commodities were thehot tickets from 2000 to 2005, as their prices began to rocket, fuelled In reply to: largepart by China's boom."Unlike oil, gas can't readily be moved about the globe to fill local shortages or relievelocal surpluses. Forecasts of freezing U.S. temperatures in winter or heat andhurricanes in summer can send prices jumping, while forecasts of mild weather can dothe opposite. Last December, amid a cold snap, gas soared to a record 15.378 a millionBritish thermal units on the New York Mercantile Exchange, or Nymex. This month,prices fell below 5 in the absence of major hurricanes and with forecasters talking aboutanother warm winter. Yesterday, gas for October delivery settled at 4.942 a millionBTUs on Nymex, off four cents."