EVALUATING THE SHORT RUN EFFECTS OF U.S. CRUDE OIL INVENTORY LEVELS ON WTI CRUDE OIL PRICE FROM 1993 - 2013

Tobi Olasojiand () and Elijah Acquah-Andoh ()
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Tobi Olasojiand: Nigeria Infrastructure Advisory Facility, Nigeria
Elijah Acquah-Andoh: Coventry University, UK

Eurasian Journal of Economics and Finance, 2016, vol. 4, issue 3, 64-84

Abstract: The focus of this research was to investigate the short-term influence of U.S. crude oil inventories on WTI crude oil prices from 1993 to 2013. This study is important for policy makers who wish to reduce the persistent and growing price volatility of crude oil and its related products as well as businesses such as airline companies who wish to make annual budgetary sales decisions. Using OLS multiple regression, cointegration, VECM and Ex-post forecast techniques; we provide evidence of an inelastic relationship in which a 1% increase in U.S. crude oil inventories is associated with 0.46% decrease in WTI crude oil prices; however this was only valid for 22% of WTI crude oil price variation. We also find that past data on U.S. crude oil inventories could be used to predict future WTI crude oil prices movement. Contrary to literature, the results of the VECM analysis indicate there is no short-run relationship between both variables over the trajectory.

Keywords: WTI Price; Crude Oil Inventories; Short Run Journal: Eurasian Journal of Economics and Finance (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (3)

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