How to use the law of market forces of demand to explain the changes in the price and quantity of crude oil on the three occasions?

Answer 1

The law of market forces state that when there is a surplus, the price falls. If you notice recently that the price for gasoline is lower than usual, it is because the natural forces in market economy are trying to combat the surplus of crude by having gas available at lower prices. This is alarming to the ministers of OPEC, who want the highest prices for their barrel, but more convenient to the consumers who are only willing and able to purchase gasoline if the prices are low, given the current economic recession. The surplus occured because consumer demand for gasoline has dramatically decreased, although OPEC suppliers were producing at the regular rate. So instead of decreasing prices lower to balance demand, which would hurt oil suppliers, OPEC has decided to cut oil production by 1.5 million barrels per day. I had to do my economic homework on this subject and I pretty much think that I've got it down to a science here. Hopefully it wasn't too confusing.