Crude oil inventories: The two faces of Janus?

Soohyeon Kim (), Jungho Baek and Eunnyeong Heo ()
Additional contact information
Soohyeon Kim: Seoul National University
Eunnyeong Heo: Seoul National University

Empirical Economics, 2020, vol. 59, issue 2, No 18, 1003-1018

Abstract: Abstract In this article, we examine whether oil inventories react to oil demand and supply shocks as a buffer to the market, as a facilitation of speculative trading, or both. Unlike previous studies that discuss the role of inventories from the perspective of the relationship between inventory and price, this study derives speculative and buffer roles from the endogenous responses of inventory to demand and supply shocks. Global, US, and Cushing, Oklahoma inventories from January 2003 to June 2008 and January 2009 to May 2018 are compared from the aggregate to sub-aggregate levels. A sign-restricted structural vector autoregressive model is employed, and robustness verifications are added. Overall, while supply and demand shocks shift oil production and consumption, the buffer responses of inventories are found to be immediate for demand shocks but gradual for supply shocks, and the instantaneous speculative responses of the Cushing inventories are revealed.

Keywords: Buffer; Oil inventories; Fundamental shocks; Oil prices; Speculation; Structural VAR (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://link.springer.com/10.1007/s00181-019-01660-1 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:empeco:v:59:y:2020:i:2:d:10.1007_s00181-019-01660-1

Ordering information: This journal article can be ordered from
http://www.springer. ... rics/journal/181/PS2

DOI: 10.1007/s00181-019-01660-1

Access Statistics for this article

Empirical Economics is currently edited by Robert M. Kunst, Arthur H.O. van Soest, Bertrand Candelon, Subal C. Kumbhakar and Joakim Westerlund

More articles in Empirical Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().