How does market concern derived from the Internet affect oil prices?

Abstract

Abstract-In recent years, social media has become ubiquitous and important for social networking and content sharing. And yet, the content that is generated from these websites remains largely untapped. In this paper, we demonstrate how social media content can be used to predict real-world outcomes. In particular, we use the chatter from Twitter.com to forecast box-office revenues for movies. We show that a simple model built from the rate at which tweets are created about particular topics can outperform market-based predictors. We further demonstrate how sentiments extracted from Twitter can be further utilized to improve the forecasting power of social media.

How does Google search affect trader positions and crude oil prices?

“…Most importantly, this research clearly presents the feedback between the GSVI and price volatility. Thirdly, compared with the study by Guo and Ji (2013), this research demonstrates the predictive ability of the GSVI in short-term crude oil price forecast. The recursive out-ofsample forecasts prove that the model with the GSVI outperforms the benchmark and the other competing model with the traditional sentiment index.…”

“…However, few studies discuss the applications of web search data in analyzing and predicting energy price dynamics. Guo and Ji (2013) first used the GSVI to analyze market concern and found an equilibrium relationship between Brent oil prices and the GSVI. Although their research found that the short-run market concerns affected price volatility asymmetrically, they did not present the relationship between investor attention and traders positions, or demonstrate the potential predictive ability of this type of open source Internet-based data.…”

“…Specifically, Guo and Ji (2013) used the GSVI to represent public concerns regarding oil prices, oil demand, financial crises, and the effect of Libyan war on oil markets. Tushar and Saket (2013) applied the GSVI and Twitter sentiment to predict oil, gold, and market indices, and proved that the forecasting performance of the GSVI was superior.…”

Oil price volatility and oil-related events: An Internet concern study perspective

“…A reformulation of the Preconference-related terms, 'OPEC meeting + OPEC announcement + OPEC conclude + OPEC cut + O-PEC rise + OPEC maintain', was used to extract the Internet concern data for the OPEC announcements. The data pre-processing procedures for obtaining daily Internet concern data are complicated (for more details, see [14]). …”

“…Since 2004, the frequency and extent of the volatility in international oil prices have been augmented [14,20]. Due to the commodity boom started around 2004, international oil price rose steadily until 2008.…”