Oil’s wild ride in 2014 signals return to volatility – Business – CBC News.
After five years in which oil traded in a narrow band around the $100 US a barrel mark, crude markets returned to volatility this fall.
Back in late June of this year, oil was trading at $107 US a barrel. At year end, it was headed below $55 a barrel.
The months in between tell the story of how changes in supply and demand can lead to wild and unpredictable swings in the price of a commodity.
Geopolitical tensions earlier this year had the effect of pushing oil prices to a peak. It pushed through $100 a barrel in March because of tensions in the Ukraine and then in June, ISIS moved in on oilfields in Iraq, threatening to cut off supplies. Crude hit a peak for the year of $107 a barrel for the West Texas Intermediate contract.
But this summer, markets began to see thedownturn in Europe and Japan were worse than previously realized. At the same time, emerging markets, particularly China, began to lose steam after propelling global growth for the past five years.
“We are seeing significantly slower growth in the emerging economies around the world, so the global economy isn’t growing at a very strong pace and this is the initial reason why oil prices started to fall,” says Craig Alexander, senior economist with TD Bank.
