Reasons Behind Words: OPEC Narratives and the Oil Market

Celso Brunetti, Marc Joëts and Valérie Mignon ()

Working Papers from CEPII research center

Abstract: We analyze the content of the Organization of the Petroleum Exporting Countries (OPEC) communications and whether it provides valuable information to the crude oil market. To this end, we derive an empirical strategy which allows us to measure OPEC’s public signal and test its credibility. Using Structural Topic Models, we identify in OPEC narratives several topics related to fundamental factors such as demand, supply, and speculative activity in the crude oil market, highlighting that OPEC announcements are highly linked to oil market volatility and traders’ positions. Most importantly, we find that OPEC communication is credible, reduces oil price volatility, and prompts market participants to rebalance their positions.

Keywords: OPEC Announcements; Structural Topic Models; Volatility; Traders’ Positions (search for similar items in EconPapers)
JEL-codes: C45 C50 G10 Q35 Q40 (search for similar items in EconPapers)
Date: 2023-09
New Economics Papers: this item is included in nep-ene and nep-ger
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Related works:
Working Paper: Reasons Behind Words: OPEC Narratives and the Oil Market (2024)
Working Paper: Reasons Behind Words: OPEC Narratives and the Oil Market (2023)
Working Paper: Reasons Behind Words: OPEC Narratives and the Oil Market (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:cii:cepidt:2023-19

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