Fundamentals, Storage, and the Model of the Squeeze

Ilia Bouchouev
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Ilia Bouchouev: Pentathlon Investments, LLC

Chapter 3 in Virtual Barrels, 2023, pp 29-54 from Springer

Abstract: Abstract We use the conventional storage theory to illustrate the dynamic feedback loop between prices and inventories and highlight the challenge of its practical applications to the oil market. We then borrow some concepts from the physics of extreme events and develop a more practical alternative approach to the storage problem. We call it a stylized model of the squeeze. For an example of such a squeeze, we delve into the infamous episode of negative oil prices.

Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sptchp:978-3-031-36151-7_3

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DOI: 10.1007/978-3-031-36151-7_3

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