What has driven oil prices since 2000? A structural change perspective

Sentiment in oil markets

“…This is unconvincing evidence that these stock markets have an inuence on oil prices. This result is in line with the nding of Fan and Xu [2011] that the S&P500 was not signicant for roughly the same period of time. Following the results of Alquist and Gervais [2013] and Beirne et al [2013], we nd that there is evidence at conventional levels that the Hang Seng signicantly explains WTI and Brent prices, but this will be revisited in section 4.2.…”

“…The Baltic Dry Index which tracks the cost of shipping goods across the oceans is used as an indicator of global industrial production following [Mitchell et al, 2005], [Frale et al, 2008], [Kilian, 2009], Fan and Xu [2011] and [Coleman, 2012] . A criticism of using the BDI is that it is inuenced by fuel costs, and so is an endogenous variable.…”

“…Thus we have a situation where speculators provide insurance to producers by taking the excess long positions not taken by consumers, but only producers have access to all the information regarding oil reserves and supply issues. [Kaufmann, 2011], [Coleman, 2012], [Fan and Xu, 2011] and [Cifarelli and Paladino, 2010] all show that speculation is an important driver of oil prices. As with the equity markets there are limits to arbitrage, namely the size of the positions traders are permitted to take and the size of the margin calls which traders will incur while they wait for their prots to materialize.…”

The Asymmetric Effects of Oil Price Shocks on the Chinese Stock Market: Evidence from a Quantile Impulse Response Perspective

“…Furthermore, because our study period includes the recent 2007-2010 financial crisis and the financial crisis can have a significant impact on world oil and financial markets [51,52], it is opportune to examine the potential impact of the financial crisis on market interdependencies between real oil prices and stock prices. To do so, we divide our study period into two sub periods, referred to as a [53].…”

Ten Reasons to Take Peak Oil Seriously

“…Although there are claims that this price increase was due to either speculative trading activity or to deliberate withholding of oil from the world market by quasi-monopolistic players, the same price-increase behavior would be expected if nearing a peak in production. Published literature investigating the causes of recent price increases tend to find only a small role for speculation and a much larger role being played by more fundamental supply and demand factors [7,[20][21][22][23][24][25][26][27]. We can demonstrate this point more concretely by looking at the tight historical correlation between oil consumption and GDP, shown in Figure 4 (a) with data from the past 25 years (more generally, the correlation is between energy and GDP, but oil has a similar pattern).…”