Prices began to recover in early 1999 and OPEC reduced production another1.719 million barrels in April. Early 1998 and the middle of 1999 OPEC production dropped byabout 3 million barrels per day and was sufficient to move prices above $25 per barrel.Between April and October, 2000 three successive OPEC quota increases totaling 3.2 millionbarrels per day were not able to stem the price increases. Prices finally started down followinganother quota increase of 500,000 effective November 1, 2000.
The price of oil is driven by much, much more than supply and demand. Global demand in 2008was actually down and global supply was up! Oil consumption decreased from 86.66 millionbarrels per day (bpd) in the fourth quarter 2007 to 85.73 million bpd in the first quarter of 2008. At the same time, supply increased from 85.49 to 86.17 million bpd.According to the laws of supply and demand, prices should have decreased. Instead, theyincreased almost 25% in that time - from $87.79 to $110.21 a barrel.
Crude oil price rose by nearly 13.8% from January to December of 2010;
despite it’s not as near
as the yearly price hike in 2009 of over 78%, 2010 still showed strength.The OPEC Reference Basket fell $5.30 or 4.7% in August, the sharpest decline in percentageterms since May 2010. The Basket remained volatile, fluctuating between $101.20/b and$113.17/b.
Following are the main reasons of Rise in oil prices
International oil companies sell most of their oil in dollars Any change in the value of the dollartherefore affects their cost structure and profitability. In turn, it affects reinvestment inexploration, development, and maintenance. The relationship between the value of the dollar andoil prices is very complex.