Petroleum Economic and Oil field management Essay - 1

Petroleum Economic and Oil field management - Essay ExampleThe political economy of non-OPEC supply, the economics of supply of other liquids and the investment and end product decisions of OPEC countries volition definitely influence the espy price all over the next three months. For other liquids and crude, the main long-term prices and supply determinants can be summed up in four main categories that include other liquids supply economics, non-OPEC supply economics, global demand for other liquids and petroleum, and OPEC mathematical product and investment decisions (Elton, Gruber, Agrawal & Mann, 2004 27247).Factors that should influence PMC while deciding on whether to enter into a forward or spot contract should include the consideration of the deference between the forward and spot prices in the sense that the two-price residuum preferably should be equivalent to any earnings and finance charges that argon due to the contract holder. In addition, opting for the forward contracts mainly would depend on factors like, festivity, season, and climate cycles that mostly affect the demands. A factor that would warn the use of forward contracts is the lack of explicit mechanism for processing new information on the production costs and inventory surprises. Another factor to consider will be oil market participants who are a diverse group and trade at different maturities and objectives. The varying degrees in the involvement of major commercial oil producers will affect this decision. In terms of spot prices, supply and demand will influence such a decision. When demand goes up and supply decreases, the spot prices are automatically anticipate to go up. Likewise when demand decreases and supply goes up, the prices should go down. Spot prices for both crude oil and petroleum product prices are likely to be affected by events that disrupt the flow of these products in the market. This whitethorn include weather-related and geopolitical factors. These sho uld be considered in the decision of whether to use spot prices or not.By victorious