War and terrorism
The price of WTI Light Sweet is affected when war and terrorism occur. When war and terrorism occurred in the past, the price was rising from the cautionary feeling that crude oil development will not progress. However, in recent years when war and terrorism occurred, the price of WTI Light Sweet is on a downward trend.
As war and terrorism occur and economic activity is sluggish, in addition to reducing crude oil consumption, it is the reason why shale oil is used instead of crude oil to survive even without crude oil. Even if the demand decreases, the supply is stable and the price drops.
Economic development of emerging countries
China's economic activity is deeply involved in the price hike of WTI Light Sweet in the 21st century. Crude oil is used not only as a fuel but also for familiar daily commodities. As economic activity gets active, the amount of crude oil used will increase and the demand will increase for supply, so the price will rise.
Although the Chinese economy has a calm feeling, there are several countries in Southeast Asia including India, where economic development is prominent. As crude oil demand increases with rapid economic growth, the price of WTI Light Sweet may rise in the future.
The price of WTI Light Sweet is not determined only by actual output and consumption. Crude oil is one of financial products including CFD. It is said that the trading value of crude oil will go up to 100 trillion yen, but of course the investor's speculation will also affect the price of crude oil. In the past, prices have fallen to one-third compared to 1% supply increase. This is the price fluctuation caused by the financial market.
The rise in crude oil after the Lehman shock was also attributed to an increase in the number of people investing in crude oil due to caution against investing in money. In other words, we bought a lot of crude oil for risk hedging and encouraged price rise. The financial market continues to expand, and now it is no longer a situation where you can explain the price of crude oil just by balancing supply and demand.