Speculators have made the price field slippery

Prices of major crude oils have been rising since last month. The WTI crude oil price crossed $81 a barrel on Oct 21, sparking worldwide concern. (WTI, or West Texas Intermediate is a type of crude used as a benchmark in oil pricing and underlying commodity of New York Mercantile Exchange's oil futures contracts.) From then on world oil prices have fluctuated at comparatively high level and have increased even in the domestic market.

Theoretically, crude prices have risen because of lack of fundamentals' support. The current crude supply is enough and oil stocks are high compared to the weak demand worldwide. So why are crude prices rising? The increase is related to the financial attribute of oil in the international futures market, says Xia Yishan, a researcher with China Institute of International Studies.

Financial crises can influence oil prices. The global economy may not have seen real recovery, but the signs have been there. On the demand side, experts expect oil demand to increase when we step out of a (financial) crisis. On the supply side, major oil-exporting countries have reduced investment in exploration, development and processing of petroleum since the global financial crisis began more than a year ago. Hence, analysts' forecasts that oil supply will fall after economic recovery could also lead to an increase in crude prices.