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Is The Oil Price Bubble Set To Burst?

While it is views and opinions which make a market, if you speak to 10 different oil analysts you will get 10 different reasons for the ongoing rise in the price of oil. Increasing demand from China, troubles in the Middle East and non-OPEC supplies drying up are just a few of the more common reasons. However, there are many in the markets who believe the bubble could burst just as quickly as it has grown.

There appears little doubt that the main reasons for the rise have been increased demand from the likes of China (with some experts forecasting car ownership to grown 30 fold over the next twenty or thirty years) and OPEC’s decision not to increase supplies to the market. Some analysts therefore believe that the price of oil today is not a reflection of the overall supply and demand throughout the world. There are still substantial oil stocks around the world and while demand is growing, there is more than enough oil to accommodate this.

Many now feel that it time for the governments of the world to pull together and put pressure on OPEC to make more oil supplies available to the market. While this will not necessarily result in a massive fall in the oil price, it will limit further upside in the short term.

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