Determinants of Crude Oil Prices: Supply, Demand, Cartel or Speculation?
Andreas Breitenfellner (),
Jesus Crespo Cuaresma () and
Catherine Keppel ()
Authors registered in the RePEc Author Service: Catherine Prettner
Monetary Policy & the Economy, 2009, issue 4, 111–136
Understanding the factors driving crude oil price developments is essential for assessing their effects. This paper examines four groups classifying a total of some thirty potential determinants of crude oil prices: fundamental factors, i.e. supply and demand, factors relating to the structure of the crude oil market (OPEC), and factors associated with the behavior of financial market participants (speculation). Bayesian Model Averaging (BMA) allows us to analyze a multitude of potential explanatory variables under model uncertainty and to quantify their robustness in explaining oil price inflation (price changes in percent). The results of our analysis suggest that the significance of individual factors varies over time. While no single factor dominates throughout the entire period under review (1983 to 2008), models explaining short-term movements in oil prices should always include headline inflation indicators and take into account the persistence of oil prices. In the 1990s, also the production quota of Saudi Arabia – a factor relating to the market structure – played a significant role; in the 2000s, both supply and demand (European demand for oil and refining capacities) have been highly important factors. The results of our analysis do not preclude the possibility that determinants other than those discussed here may become significant in the long run. While fundamental shortage conditions play a key role in driving up the price.
Keywords: oil price; Bayesian model averaging (search for similar items in EconPapers)
JEL-codes: Q30 Q31 C11 C52 (search for similar items in EconPapers)
References: Add references at CitEc
Citations: View citations in EconPapers (17) Track citations by RSS feed
Downloads: (external link)
https://www.oenb.at/dam/jcr:996ab297-c6e6-493d-8b0 ... _06_tcm16-181766.pdf (application/pdf)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:onb:oenbmp:y:2009:i:4:b:6
Ordering information: This journal article can be ordered from
Oesterreichische Nationalbank, Documentation Management and Communications Services, Otto-Wagner Platz 3, A-1090 Vienna, Austria
Access Statistics for this article
Monetary Policy & the Economy is currently edited by Doris Ritzberger-Gruenwald and Ernest Gnan
More articles in Monetary Policy & the Economy from Oesterreichische Nationalbank (Austrian Central Bank) P.O. Box 61, A-1011 Vienna, Austria. Contact information at EDIRC.
Bibliographic data for series maintained by Claudia Kwapil ().