A number of parameters are used to judge the quality of olive oil, including how the olives are picked and how it is pressed. Ideally, you should be able to taste an the oil before purchasing it to judge its quality, but if this is not possible, there are a few things to look for which will help you make an informed decision. Fresh, cold pressed oil with an even, clear color is usually best. Most nations are members of the International Olive Oil Council, which has tough standards for labeling that will provide insight into the quality and taste of the oil. Unfortunately for American consumers, the United States does not belong to the council, and therefore American labels may be not be as clear.
The best olive oil tends to come from hand picked olives which are cold pressed, and the highest quality pressing is the first pressing. Hand picking ensures that no bad olives were mixed into the batch to taint the flavor of the oil, and also that leaves, twigs, and detritus were not mixed in with the olive press. Because hand picking takes time, olive oil made from hand harvested olives will be significantly more expensive. Cold pressing, without the use of heat, protects the complex flavors, while the first pressing is lowest in acid, and will have the most well developed, intense flavor. Avoid refined and otherwise processed olive oils at all cost.
If possible, buy fresh oil. If you live in a olive producing region, you can often take decanters directly to the olive press for the best oil. If this is not an option for you, only buy products with a production date; although olive oil stores well, it tastes better fresh. Furthermore, it should be of an even color, with no clouding, unless the weather is cold. It should be stored in stone, ceramic, or glass because plastic will leach unpleasant flavors into it. The olive oil should be stored in a cool, dry, dark place to prevent it from going rancid. If you live in a warm area, purchase it in small amounts and use it quickly.
Taste, of course, is the best way to judge olive oil. Stores which supply fine olive oils will usually allow their customers to taste it. Start by smelling the olive oil; it should smell like rich, fruity olives, with a faint hint of pepper. Examine the color for clarity, but do not put too much emphasis on what color it is, as different regions produce different colored oils. Next, taste a small amount, rolling it around your mouth before allowing it to slide down your throat. It should taste clean, rich, fruity, and strongly peppery. Truly high quality oil will have an intense bite, although this will mellow with time in storage. If it tastes buttery or otherwise "off," it may be rancid, and should be avoided.