Crude Price Changes Research Articles

Crude Price Changes and Nigeria’s Foreign Reserves, 2008-2023

The study investigated the correlational association between crude price and foreign reserves using the Nigerian economy as the jurisdiction of interest. The study covered the period 2008 to 2023 representing a 25year period. Bivariate pairwise correlational matrix was used to find that a highly significant positive linear association exists between crude price and foreign reserves. Following the findings arising from this study, it is recommended that the country should take advantage of crude price movement in building its foreign reserves given that increase in crude price will likely lead to a rise in revenue from crude sale. A high foreign reserve can act as stabilization fund for exchange rate, debt management and other shocks from international financial flows. Building foreign reserves can be beneficial in managing such exposures to the advantage of the Nigerian economy.

Asymmetric effects of oil price changes on the Nigerian exchange rate

PurposeThe purpose of this paper is to examine the effect of crude oil prices on the Nigerian exchange rate with emphasis on discriminating between the effects of positive and negative changes in oil price on exchange rate.Design/methodology/approachThe authors used monthly time series data from 1996:1 to 2019:6 and adopted two oil price measures, namely, Brent crude and West Texas Intermediary prices. For analysis, the authors used stepwise least squares to estimate a non-linear ARDL (NARDL) model and Wald tests to determine cointegration and the presence of asymmetric effects.FindingsThe findings showed that positive and negative Brent crude price changes significantly affect exchange rates differently in nominal terms, both in the long-run and short-run. However, the differences were purely in terms of effect size because the exchange rate decreased for both negative and positive oil price changes.Originality/valueWhilst empirical research on asymmetries in the effect of oil price on exchange rate abounds, little evidence exists in Nigeria’s case. Although some studies previously tested for asymmetric oil price effects on the Nigerian currency, the approach used did not estimate long and short-run effects or test of long-run and short-run asymmetries. This paper fills this methodological gap using monthly using the NARDL approach. The NARDL approach provided the advantage of estimating effects for the long-run and short-run and testing for asymmetries in both time spans.

Deregulation of Diesel Pricing in India and Its Implication on the Oil Price - Macro Economy Relationship

The severity of impact of crude oil price shocks on the macro economy of an oil importing country are thought to be moderated by regulating domestic prices of petroleum products. India has adopted a deregulated regime of pricing of bulk purchases of diesel in January 2013 moving away from a controlled and subsidised pricing system. This paper investigates how this change has affected (A) the influence of crude price changes in determining diesel prices in India using an ARDL framework and (B) the severity of impact of international crude oil price changes on the macro economy of India using a SVAR framework. Based on monthly data between 2004 April and 2017 February, we find that in the post deregulation phase (1) diesel prices are influenced by crude oil prices much more than before; (2) the intensity of impact of crude oil price changes on inflation has increased; (3) the response of monetary policy to crude oil price changes have become statistically insignificant. We also find that the impact of crude price changes on output has always been insignificant.

The Effect of Oil Price Fluctuations on Spanish Inflation

This article analyses the impact of changes in oil prices on the consumer price index (CPI) in the Spanish economy from a historical perspective. The evidence provided reveals a substantial degree of pass-through of these changes to CPI components tied to heating and vehicle fuel (direct effect). However, the estimated effect of changes in crude prices on firms’ input costs (indirect effects) and on inflation or wage expectations (second-round effects) is, on average, moderate. Consequently, in the current situation, in the absence of fresh shocks in the expected path of oil prices, the rise in the CPI in early 2017 – linked to base effects prompted by the low price of this commodity for most of 2016 – can be expected to be essentially temporary and, therefore, consistent with a downward trajectory in inflation in the coming months.

Asymmetric oil product pricing in India: Evidence from a multiple threshold nonlinear ARDL model

This article examines the potential asymmetric transmission from crude to oil product prices in India. Instead of linking oil product pricing only with rise and fall of crude price, this article analyzes the effect of crude price fluctuations by decomposing the crude price changes in quantiles by holding multiple thresholds. Use of multiple threshold nonlinear autoregressive distributed lag (MTNARDL) model improves precision in estimating the asymmetric effect of the crude price changes on oil product prices over that of the single threshold NARDL model. It is observed that the asymmetric price transmission is high across all oil products, when higher and lower quantiles of crude price fluctuations are compared. This shows that the price of oil products increases when crude prices go up; however, the advantage of the sharp fall of crude prices is not fully transmitted to the oil products.

The Effects of Oil Price Shocks and Exchange Rate Volatility on Inflation: Evidence from Malaysia

The objective of this paper is to examine the effects of oil price shock on inflation in Malaysia, using monthly data from 2005 to 2011. VAR-VECM and Granger Causality model were employed to analyze the data. The cointegration between all variables are existence also at 5% significant level in the long run. But in the short run, only oil crude price affected the inflation. For granger causality test, we found that the inflation does not granger cause to the exchange rate but it does granger cause to the oil price. The oil price does granger cause to the inflation but it does not granger cause to the exchange rate. The exchange rate does not granger cause to both of the variables (Inflation and Oil Price). So, the oil crude price can give an effect on inflation. If the rate of oil crude price changes, the inflation also changes. This finding will contribute to Malaysian government in making policy to control the petrol price to avoid from the inflation.

Upgrading Residues to Maximize Distillate Yields with UOP Uniflex<sup>TM</sup> Process

Never before have refiners faced the challenges caused by dramatic changes in crude prices and refinery margins. However some worldwide trends have not changed, such as the need to shift refinery product distributions to a more diesel-oriented slate and to reduce residue fuel oil production. The required shift from gasoline to distillate fuels cannot be accomplished solely by modifications to current hydrocracking or FCC operations. New technologies will be required that achieve higher non-distillable conversion and increased selectivity to distillate-range products. Ideally, these technologies should be both cost-effective and commercially proven. UOP has responded to the needs for increased distillate yield and non-distillable conversion with the introduction of its latest residue upgrading technology offering, the UOP Uniflex Process. This high-conversion slurry hydrocracking technology contains elements of a commercially-proven slurry reaction system and the UOP UnicrackingTM and UnionfiningTM technologies. The Uniflex Process can achieve non-distillable conversion levels in excess of 90 wt% with distillate yield over 50 vol%. This paper discusses the features of the Uniflex Process technology, its yield and economic advantages over conventional residue upgrading technologies, and other applications of the technology.

Market structure and price adjustment in the U.S. wholesale gasoline markets

The issue of sticky prices in U.S. wholesale gasoline market is re-examined allowing for the effect of market structure due to increased market concentration caused by mergers, acquisitions and joint ventures which started in the late 1990s in the U.S. oil industry. I investigate the effects of market structure on the pattern of price adjustment based on the notion that increased market concentration leads to downward price stickiness and asymmetric short run price adjustment in the transmission of crude price changes to wholesale gasoline price. I find that market concentration has an insignificant asymmetric effect on the speed of price adjustment but a significant asymmetric effect on short run price adjustments in the response of wholesale gasoline prices to crude price shocks in three U.S. wholesale markets. Furthermore, the signs on the coefficients of market concentration effects on price dynamics in the models support the assertion that increased market concentration leads to downward price stickiness in only one of the three markets examined. Overall, the results indicate that market structure does not have a strong effect on the dynamics of price adjustment.

Testing for asymmetric pricing in the Canadian retail gasoline market

This paper applies a Threshold Regression model to test for asymmetric pricing in the retail gasoline market in Canada, using weekly data for the period January 1990 to December 1996. We present results for 13 Canadian cities for both premium and regular gasoline. Within the context of an error correction model we test for the presence of asymmetric price behaviour using average changes in crude prices as well as various lags for the change in crude as possible thresholds. We are unable to find any evidence to support this view.

Do product prices respond symmetrically to changes in crude prices?

Do product prices respond symmetrically to changes in crude prices?

The Determinants of Official OPEC Crude Prices

The hypothesis of this paper is that crude oil, like any other unfinished commodity, is valued for the products derived from it; the purpose is to offer an empirical explanation for changes in the crude price charged by the members of OPEC. The model results show that the market-clearing prices reported to prevail for petroleum products on the principal petroleum spot market at Rotterdam are the primary determinants of changes in official crude prices. A systematic relationship between offical and spot prices is argued to have prevailed since 1974. An appendix clarifies five types of data required for the model. 13 references, 4 tables.