Low interest rates may also occasionally exacerbate upward pressure on prices since commodity users are inclined to hold larger inventories when carrying costs are low. In addition, commodity producers may be inclined to delay production and “leave the oil in the ground” until interest rates rise and the opportunity cost of postponing the sale of their commodities is higher.
8 As a result, demand increases while supply is squeezed. Alternative interpretations and the role of the speculator Few economists would dispute the importance of supply and demand and the special nature of commodity markets in explaining price movements.