Who Does Control Oil Stock Prices Nowadays?
Who is in charge of the oil stock prices today? Is it OPEC, Wall Street, or other entities that control the price fluctuations of oil stocks? Even the best oil stocks to buy can be affected by outside factors, and the price of a stock involves a number of different components. Who sets the price that an oil stock is bought and sold at though? The answer is Wall Street and the other markets, and the investors and speculators who are involved in the oil futures market. Oil stock prices are affected by the investment patterns of large hedge funds and trader banks as well.
Stock market investing in the energy sector can be confusing for many, especially inexperienced investors. The old method of supply and demand is no longer used to determine oil stock prices, instead a more complex method is used. The international oil exchanges include the NYMEX and ICE Futures, and these exchanges are the ones who set the global benchmark for oil prices. These benchmarks will determine the price of Canadian oil stocks, as well as stocks for oil companies in other countries. In the past OPEC had some control, because this organization sets production limits for member countries, but this is no longer the case.
Whether the stock being considered is a top oil choice or one of the best natural gas stocks, the price will reflect the benchmark prices set by the major exchanges. Speculation has been shown to be a source of higher oil stock prices, with investors speculating on oil futures and raking in large profits without risking large amounts of capital. This type of activity does not affect some areas of the energy sector, such as wind energy stocks, but where oil and natural gas are concerned speculation can result in a bubble. Eventually the stock price will drop, and some investors may lose large amounts of capital when this occurs.