Demand for oil has fallen dramatically in the worst recession since the 1930s, yet oil prices doubled in the year to January. What is behind these apparently contradicting moves and where are prices heading now?
One of the main problems in considering future oil prices is to understand how international oil markets actually work. There are two markets for oil: the wet barrel and the paper barrel. In the wet barrel oil market, real people trade real barrels of crude oil and its products either on an immediate 'spot', or term-contract basis.
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