Why Oil Price is Increasing?
The answer comes from the Bank of Canada Monetary Report. A strong increase in demand from China, associated with large, commodity intensive infrastructure projects and some accumulation for investment purposes, has been a key contributor to the recent rise in commodity prices.
Stronger aggregate demand (household final consumption + capital expenditure + government expenditure) and the reduction in financing costs have provided greater incentives for companies to build inventories. These factors, together with supply cuts by OPEC, have also helped boost world oil prices.