From the demand side, the global or U.S. economy improves, or turns out to be more robust than was forecast, boosting the need for oil used in transportation, oil or gas in manufacturing and petrochemicals, or other. A colder-than-normal winter hikes demand in Canada, U.S, Europe, Russia and Japan. A hotter-than-normal summer boosts air-conditioning demand.
From the supply side, global oil production or the amount in storage is lower than forecast, lagging demand growth. The guesstimates were wrong. Unexpected and/or temporary production shortfalls occur due to hurricanes in the Gulf of Mexico, problem wells, disappointing drilling results, project delays in bringing new production to market, pipeline restraints, or civil unrest in producing areas such as Nigeria or Colombia. The global or U.S. rig count falls unexpectedly, or by more than forecast, leading eventually to reduced available supply. Refineries are shut-in due to emergency or routine maintenance.
Geopolitics affect prices too. OPEC meetings and informal OPEC pronouncements spook oil markets and traders. War in the Middle East or elsewhere causes major supply disruptions. Guerillas sabotage oil or gas pipelines or other production facilities. State or federal regulation, legislation or tax changes make drilling and production more economic, thus boosting activity.
From the demand side, a slowdown in overseas or U.S. economies reduces demand for oil or refined products (diesel fuel, jet fuel, kerosene, etc.) or natural gas. A warmer winter than usual reduces the need for heating oil or gas.
From the supply side, global oil production or U.S. gas output turns out to be higher than forecast, or higher than demand, creating a supply glut. The amount of oil or gas in storage keeps rising, outpacing demand and creating a glut that takes time to be absorbed by the market.
Unexpected production increases occur due to more drilling, or more success per well drilled because of technology advances. Or, more companies enter the industry and start drilling. As oil prices rise, unaccounted-for inventories surface, curtailing the price rise.
Geopolitically, OPEC meetings or pronouncements spook oil markets and traders. State or federal regulations, legislation or tax changes suddenly make drilling and production less attractive.