Crude oil stocks are closely monitored by traders to establish the markets natural supply and demand levels. Hoarding was a major factor in the high crude prices in the 1970s and evidence is again suggesting that hoarding is fuelling current record high crude prices. Crude stocks had fallen because refiners had adopted just-in-time stock management policies. However, traders have noticed that some countries are purchasing oil at levels well above their rate of consumption, suggesting that the hoarding of oil stocks is once again occurring. Traders have recently increased the worlds crude markets assumed levels of demand quite substantially because of increased consumption by developing nations such as India and China.
Question: If hoarding is supporting high crude prices then one would expect prices to fall back once hoards have been established.
Options:
A. true
B. false
C. uncertain
Answer: A