Searching for a stable oil price

The summer travel season might help oil prices appreciate over the next few months. Planes are beginning to fill up as travellers want to visit friends and family in other states and countries. Those who do not wish to fly will still need to fill up their cars at the pump, also helping to spur demand. The recovering global economy is still the primary factor that will send oil higher or lower.

At the moment most markets are stabilizing as economic indicators are pointing to lower unemployment and more private sector spending. If global markets stay in a trading range oil prices should stay in that range as well. This should help oil stay below $80.00 per barrel which will help the economies around the globe continue to grow at a moderate pace.

Most investors are aware of the oil leak in the Gulf of Mexico, and the possible repercussions from this problem. At the moment the leak has not been stopped and millions of gallons of oil have leaked into the environment. This issue could cause the United States government to tighten its policies on how oil companies can gain access to the offshore oil.

If the government starts to talk of no drilling policies this could send oil higher, as these companies will have to look elsewhere to find and drill for the commodity. This could help out the Middle Eastern countries that all have significant oil reserves, and control the world output. If a portion of the world oil cannot come from the United States then those countries who allow offshore drilling will prosper, as well as those who drill on land.

Oil traders might look to the forex market for added insight into future prices. The price of oil is based in United States Dollars, and the dollar has been strengthening during the past month against the Euro. This would normally cause the price of oil to decrease as the dollar gained in value. However, it did not suggesting that the price of oil wants to go higher on the hopes of a global recovery.

As the price of oil approaches $80.00 per barrel, investors and traders will watch closely to see if it breaks through this number and goes higher. A higher oil price could slow down the economic recovery as the cost of goods would increase with an appreciating price. This is why a stable oil price somewhere between $70.00 and $80.00 per barrel is necessary for the entire globe.

Keeping oil prices in this range will promote economic recovery and still produce demand from everyone who requires oil for day to day living. The oil exporting countries need the demand to generate income, and the consumers need a fair price so that they can live without hurting their wealth. The market will more often than not find the fair price; however oil spills and government actions will only add uncertainty to the future price of oil.