market for crude oil, and some of its significant determinants of demand and supply
The paper will discuss the market for crude oil, and some of the significant determinants of demand and supply influencing the nature of activities taking place in this market. Oil is an essential resource in the entire world hence a necessary commodity used by individuals in a variety of ways. Crude oil is a crucial resource that influences the levels of success realized by various industries, such as the manufacturing and agricultural sectors. There are diverse determinants of demand and supply that affects the market price for this product. Such determinants of demand and supply of crude oil plays a critical role in dictating the progress of organizations that utilizes the product to facilitate their day-to-day functional activities.
There are diverse factors that determine the demand and supply of crude oil. Technology and productivity is one of the significant factors that influence the demand and supply of crude oil in the market. For the past few decades, technology has been a significant factor influencing the progress of the energy industry. It is worth noting that technology advancement has affected not only the energy but also other critical sectors in many nations globally. Technology influences both the demand and supply of crude oil in the market (Ramírez-Corredores, 2017). First, technological advancements have translated to enhanced and effective methods of mining the commodity from oil-producing nations. Such nations utilize technology to improve their production, thus leading to an increase in the supply of the product in the market. Secondly, technological advancements play a critical role in influencing the demand for crude oil. Through technological advancements, companies using crude oil in their production process have managed to improve efficiency, thus leading to an increased demand for raw materials. Such companies, therefore, demand a high quantity of the product, thus translating to an increase in demand.
Consideration of technological trends can lead to a faultless prediction concerning the probable nature of the crude oil market. Technological trends will play a critical role in shaping the technical efficiency of both demand and supply of this commodity. There will be notable advancements in technology in the near and far future. Enlightenment, innovation, and creativity are translating to the persistent advancements in technology. As such, more technological improvements will probably be realized hence dictating the expected changes in demand and supply of crude oil. Such a trend will translate to notable implications to the equilibrium quantity and price. First, persistent technological advancements will lead to efficiency in the production of crude oil, thus leading to an increase in the quantity of the product offered by producers in the market. An increase in quantity supplied translates to a decrease in market price (Seeley, 2017). As such, the efficient production of crude oil will lead to increased volume and ultimate fall in the prices of the commodity in the market.
In summary, the selected commodity, oil, plays an essential role in dictating the levels of success attained in various sectors. Oil is a vital product in facilitating the progress of multiple industries, such as manufacturing and processing firms. Technology is a crucial factor that influences the demand and supply of crude oil. Improvement in technology translates to efficient extraction of the commodity from the oil-producing nations hence increased the amount of supply in the market. Similarly, advancements in technology have translated to efficiency in the manufacturing and processing companies, thus leading to an increased demand for oil products. With persistent advancements in technology, the production of crude oil will probably increase hence leading to a fall in market prices.
References
Ramírez-Corredores, M. M. (2017). The science and technology of unconventional oils: finding refining opportunities. Academic Press.
Seeley, K. (2017). Short-Run Aggregate Supply/Aggregate Demand and Policy. In Macroeconomics in Ecological Context (pp. 273-294). Springer, Cham.