Article Analysis Research Paper Example | Topics and Well Written Essays - 750 words

word Analysis - Research Paper ExampleConsequent to the reduce deal, February-delivery of heating anele fell by 1.2 percent on the New York Mercantile Exchange. This paper explores how consumption patterns over a period tinge the price of heating rock oil when supplement remains the same get hold of remains the same. The paper to a fault reviews how price elasticity of the demand for a given commodity plays a crucial role in deciding about its demand patterns. While Supply Remains Fairly Same, Price of the trade good whitethorn Still F entirely Heating oil is a freely traded commodity and its supply and demand patterns by and large decide about its prices. Heating oil is a hugely consumed commodity in the U.S and globally. Apart its industrial consumption, heating oil is largely consumed by the Northeast region of the U.S. to provide warmth in the homes during pass months. It is obvious that its demand usually surges during winter months however, this winter, as reported in the article, heating oil go through a sub codd demand perhaps, due to milder winter or due to economic recession that is waiver in the US for quite some time or mix of it. Market always draws proof about the likely consumption from the past data and accordingly readies itself for the supply however, when for some reason demand does not match intended supply, the price starts plummeting to find a new counterbalance. Heating oil is a sensitive item and its prices limit on fluctuating regularly following change in supply and demand dynamics. When demand and supply positions are in equilibrium prices remain fairly stationary however that is not found in case of heating oil as consumption patterns keep on changing due to various reasons regularly. The following schematic represents how new equilibrium from E1 to E2 is quickly achieved in speech to the reduced demand. D1 Price D2 Supply E1 E2 Quantity While Demand Remaining Fairly Unchanged, Price of the Commodity May Still Rise T he article speaks about the reduction in the prices of heating oil due to reduced demand however, reverse is also true that when supply of the heating oil plummets while its demand remains more or less unchanged, its price may still rise. Though heating oil is a refinery product but its pricing is largely linked with the price of raw(a) oil and its supply, which is controlled by OPEC countries. OPEC being an international cartel of the major crude oil producing countries controls its supply so as to block prices to go down beyond certain levels. This is done largely by controlling supply of the crude through reduced production among its member countries. The law of demand and supply in price mark takes its course even then. The reduced supply arrests the fall of price to find a new equilibrium that can restore the minimum desired price by this cartel. Thus, OPEC members have been maneuvering the supply of the crude oil by administering the production quota for its member countrie s to maintain its prices above certain levels that in turn does not stomach the prices of all downstream products to fall below specific levels. However, in a dynamic world things keep on changing rapidly. Any new large oil finds anywhere in the world distant OPEC may alter supply dynamics of crude oil and change the price behavior of all downstream products including heating oil. The Price-elasticity of Demand of Heating Oil is Low The price elasticity is a pulse of the change in demand