The role of precautionary and speculative demand in the global market for crude oil

Jamie Cross, Bao H. Nguyen and Trung Duc Tran

Journal of Applied Econometrics, 2022, vol. 37, issue 5, 882-895

Abstract: Contemporary structural models of the global market for crude oil jointly specify precautionary and speculative demand shocks as a composite shock, named a storage demand shock. We resolve this identification problem and examine the effects of these distinct shocks, along with conventional demand and supply shocks, on the global price of crude oil. We find that uncertainty driven precautionary demand for crude oil is, on average, the primary driver of real price of oil fluctuations that have previously been associated with storage demand shocks. Historically, these shocks have had distinct effects on the real oil price dynamics since the 1970s.

Date: 2022
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Citations: View citations in EconPapers (23)

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https://doi.org/10.1002/jae.2905

Related works:
Working Paper: The Role of Precautionary and Speculative Demand in the Global Market for Crude Oil (2021)
Working Paper: The role of precautionary and speculative demand in the global market for crude oil (2020)
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