Writer's choice Essay Example | Topics and Well Written Essays - 250 words - 28

Writer's choice - Essay Example On the other hand, if oil prices dropped and the stock prices were on the rise, then the IMF assumed an increment in oil supply. These two forces explained the plunge of oil prices (Zumbruni, Para 1-4). The results indicated that during the first phase the oil price drop was attributed by weak global demand. For instance, crude oil declined from$ 105 to around $ 82. However, in the second phase, the oil prices for the crude oil dropped further to $ 50 and IMF suggests that a decrease in the oil price was due to increased demand. The estimates reveal that supply outdid the demand during this phase (Zumbruni, Para 1-4). The explanation aligns with the class materials effectively as it explains the effect of reduced demand and increased supply on prices. Accordingly, a decrease exerts a downward pressure in the short-run. Apparently, increased supply allows a surplus of the commodity in the market, therefore, exerting a downward pressure on the price levels. These aspects are reflected in chapter four that focused on demand and supply within the oil markets. The above information may be illustrated as follows; Zumbruni, Josh. Supply of Demand? The IMFBreaks Down the Collapse of Oil Price. Wall Street Journal. Real Time Economics. April 14, 2015. Retrieved from