Fall In Oil Prices Research Articles

The effect of negative information on the volatility of real estate residential prices in Abuja, Nigeria

PurposeThe purpose of this paper is to determine the effect of negative information on the volatility of real estate residential prices in Abuja, Nigeria.Design/methodology/approachThe empirical research covers a sample period of 17 years from the first quarter of 2000 to the fourth quarter of 2017. The leverage effect of Abuja’s real estate residential price volatility is determined. Exponential generalised autoregressive conditional heteroscedasticity is used to determine the ARCH shock, GARCH persistence and the leverage effect of the volatility of residential prices in Abuja.FindingsThe research found that the volatility of real estate prices varies from one category of residential property to another. The leverage effect was found only in the price of two and three bedroom flats in Abuja.Originality/valueThe findings provide useful information on the volatility of real estate prices for real estate investors. The study has policy implications for the regulation of measures that gradually checkmate the patterns of volatility in the Nigerian real estate market. It also controls negative information (such as a fall of crude oil prices, high costs of building materials, inconsistency of macro-economic policies and insecurity and political uncertainty) which mainly raises the level of uncertainty in the market and exposes investors to risk.

Potential Trajectories of Oil Price Dynamics

This paper attempts to systematize factors of the fall in the global oil price in 2014 and discusses potential trajectories of its further dynamics. Examining the effects of supply and demand on the market, similarities are drawn with the fall in the oil price in 1986.

KRYZYS EKONOMICZNY W FEDERACJI ROSYJSKIEJ W LATACH 2014-2016

The economic collapse in the Russian Federation observed in the years 2014-2016 is a result of overlapping negative trends both internally and externally. It should be emphasized that the economic shock caused by external factors in the form of economic sanctions imposed on Russia by Western states and the fall in oil prices on the world markets only accelerated the onset of the economic crisis but was not the main cause of its emergence. In this case the more important was an ineffective economic policy, which made economic development dependent on the prices of natural resources, primarily energy resources and it led to a deep structural crisis. In this context, the term “lost decade” has been used to emphasize the fact that the authorities have lost the chance to carry out deep structural reforms. Necessary and extremely costly economic, political and social reforms should were to be carried out during the economic prosperity that was fueled by persistent high oil prices. Introducing the above reforms during the crisis may not be feasible, however, the complete abandonment of such projects will make it impossible for the state to protect itself against future crises.

Coping with Falling Oil Prices

This paper studies the impact of declining oil prices on banks in sub-Saharan African oil-exporting countries. Results indicate that banks respond differently to an oil shock depending on their ownership: (i) domestic banks are the most adversely impacted and experience a deterioration in asset quality and liquidity; (ii) foreign-owned banks are the most resilient as they are able to improve asset quality and attract deposits but at the same time, they decelerate credit growth; in contrast, (iii) Pan-African Banks help stabilize overall credit but large banks in that segment experience reduced asset quality. These differentiated results suggest a tradeoff between maintaining credit growth and safeguarding financial stability in an oil slump which could be addressed by both micro- and macroprudential policies.

Oil price and inflation dynamics in the Gulf Cooperation Council countries

This paper employs the linear autoregressive distributed lag (ARDL) model, the asymmetric nonlinear ARDL model, and the Pooled Mean Group (PMG) method to examine the symmetric and asymmetric effects of oil price changes on inflation in the Gulf Cooperation Council (GCC) countries. Short-run and long-run asymmetries are introduced via positive and negative partial sum decompositions of oil price. The results suggest that the variables are cointegrated and that there is significant evidence of long-run asymmetry. This implies that rising and falling oil prices have different effects on inflation. In particular, while rising oil price has a significant positive effect on inflation in all the cases, falling oil price is either insignificant or has a negative effect on inflation. The PMG model indicates that only rising oil price has a positive significant effect on inflation. Moreover, the results suggest that positive oil price changes have a larger impact than the negative ones, that the effect of an oil price shock is larger in the long-run than in the short-run, and that there is incomplete pass-through effect of oil price on domestic inflation.

Social and economic aspects of the recent fall in global oil prices

Purpose The global energy market has been facing lower prices of crude oil in recent years. Lower fuel price leads to lower transport cost and cheaper agricultural inputs (such as pesticides and chemical fertilizer), resulting in lower prices of agricultural commodities in the international markets. On the other hand, lower global oil price reduces the oil revenues of oil exporting countries, resulting in a decrease in government expenditures. Therefore, the purpose of this study is to examine the impacts of lower global oil and agricultural commodity prices and government expenditure on the entire economy and poverty level of Malaysia. Design/methodology/approach This study used a computable general equilibrium model (CGE) to investigate four simulation scenarios based on the latest Malaysia’s input-output table belonging to 2010. The first scenario is a 30 per cent fall in the export and import prices of agricultural commodity prices, while the second is a 50 per cent decline in the export and import prices of crude oil, and the third combines them. In the fourth scenario, government operating expenditure declines by 4 per cent because of the fall in government’s oil revenues as a result of the decline in global oil prices. Findings The simulation results suggest that lower international oil price decreases real gross domestic product (GDP) and investment in Malaysia and influences positively the output and employment of some agriculture sectors. However, lower agricultural commodity price increases real GDP and investment in the country and negatively influences the output, employment and exports of all agriculture sectors. The decline in government expenditures also increases the output and the employment in the economy, whereas it decreases household consumption. In conclusion, results show that the agriculture sector losses from the current decline in international agricultural commodity prices, while it benefits from lower oil and government expenditure. Originality/value The main contribution of this study is comparing the impacts of recent falls in global oil and agricultural prices on the entire economy and agriculture sector of Malaysia. Investigating the impacts of these issues on the poverty level of Malaysian households is another contribution to the study. Another contribution is analyzing the impact of a reduction in government expenditures because of the decline in global oil price on the economy and welfare of Malaysia. Therefore, this study makes a useful contribution to the small literature of the topic.

The World Economy: Forecast Summary

Recent data indicates that the global output growth cycle has peaked. We expect global GDP growth to continue, but at a slightly slower pace than in the past two years.Tariff increases and trade disputes have contributed to slowing growth and have added uncertainty to the global economic outlook.While slightly faster wage growth in advanced economies and tighter labour markets raise the potential for higher inflation, the fall in oil prices in late 2018 should, with slowing output growth, prevent a widespread pick-up in inflation.Continued low inflation opens the possibility for central banks to increase monetary accommodation to support economic activity should it be required.Despite slower output growth this year, this decade will have seen sustained global GDP growth averaging 3.8 per cent a year.

Predictive Maintenance of Oil and Gas Equipment using Recurrent Neural Network

Oil and gas industry projects involving equipment acquisition and installation are usually capital intensive. The recent crude oil price fall has tightened the expenditure and therefore reinforced the importance of effective maintenance management across the oil and gas industry. Rotating mechanical equipment such as induction motor, compressors and pumps, are essential elements in industrial processes. Effective maintenance of these equipment is crucial to avoid several damage and downtime for repair. Predictive maintenance has attracted huge attention in this industry driven by sensors and data acquisition. This paper focuses on developing machine learning algorithm based on recurrent neural network (RNN) using long short-term memory (LSTM) to carry out predictive maintenance of Air booster compressor (ABC) motor. The resulting experiment demonstrates the performance of RNN-LSTM algorithm implemented for fault prognosis model of rotating equipment predictive maintenance. The application of these algorithms could mitigate risk and reduce cost in the oil and gas operation.

Trading as sharp movements in oil prices and technical trading signals emitted with big data concerns

The sentiments of market participants may be aroused when a sharp rise (fall) in oil prices is emitted. In this study, we take the trading signal emitted by the technical indicator into account accompanied with the sharp rise (fall) in oil prices into account in trading stocks. We explore whether investors will profit by trading stocks when a sharp rise (fall) in oil prices and technical trading signal are emitted together. Owing to big data concerns in employing the constituent stocks of DJ 30, FTSE 100, and SSE 50 as our samples, investors can beat the market in trading stocks. The sharp fall in oil prices, such as over 5%, and the oversold technical trading signals by the SOI occurring together can lead to better performance than trading stocks and the sharp movement in oil prices emitted only. Results revealed are for trading the constituent stocks of DJ 30, FTSE 100, and SSE 50 without exception after taking big data into account.

Revenue Dampening Effect of the Oil–Dollar Inverse Relationship for Sub-Saharan African Economies

ABSTRACTWe investigate the revenue impact of the inverse relations between oil price and the US dollar exchange rates for the following Sub-Saharan African countries: Angola, Ghana, Kenya, Nigeria, and South Africa. These countries were chosen either because of their reliance on oil exports or due to their economic dominance in the region. Existence of a negative relationship suggests that falling oil prices result in two interrelated outcomes: lower oil export revenues in US dollar terms and greater (lower) purchasing power of the dollar (domestic currency). For the oil exporters in our sample, we find evidence of revenue dampening in that reduced dollar receipts during periods of falling oil prices were dampened by higher revenues after conversion to the local currency. Also, we find evidence of both short-run and long-run reverse causality between oil price and exchange rate. But this is only for the currencies of the key oil exporters. On that basis, we recommend a policy shift that emphasizes domestic resource utilization as the basis for exploiting the benefits of the oil–dollar inverse relationship.

How Distortionary are Oil Price Shocks to Consumer Prices? Empirical Evidence from Nigeria Using Dynamic Co-Integration Models

This paper examines the response of consumer prices to the oil price shocks in Nigeria. The current oil price slump and its slowness to rise for giving hope to economic recovery pose a threat to many oil-backed economies, particularly Nigeria. As such, oil price and consumer price index are modelled, based on dynamic error-correction models, with aim to capture asymmetric response of consumer prices to a change in oil price. Quarterly time series data spanned from 2001Q1 to 2016Q4 were obtained and analyzed using dynamic co-integration method which allows for asymmetric adjustments. Our results revealed that three disaggregated consumer prices exhibit some degree of persistence to their long-run values, however, their responses are faster to a rise than to a fall in oil price. Correspondingly, aggregate price is found to be rigid downward, suggesting high prices of consumer commodities in Nigeria. This serves as a confirmation that low oil price is likely attributed to the high costs of basic consumer commodities in Nigeria, perhaps due to subsidy removal. We thus recommend that a credible price stabilization policy should be designed to curb the price-increasing effect that an oil price downturn may have on consumer commodities, such target should specifically focus on food and beverages, clothing, and energy prices.

Price discovery or noise: The role of arbitrage and speculation in explaining crude oil price behaviour

This article presents a model for the determination of crude oil futures price that focuses on the activities of arbitragers and speculators. Arbitragers, who exploit cost of carry deviations, rely (in part) on commodity convenience yield to identify mispriced futures contracts. However, an important impediment to this process is obtaining timely information regarding marginal convenience yield as crude oil inventory changes. This study employs an unconventional measure of convenience yield that allows for inferring inventory changes directly from spot and futures prices of the commodity. The model is tested for three and six month West Texas Intermediate futures contracts. The results show a decline in the effectiveness of arbitrage activity during the sharp rise and fall in crude oil prices in 2008. Over the same period, it is found that speculation played a greater role in the determination of crude oil prices.

Inflation target and (a)symmetries in the oil price pass-through to inflation

In this paper we employ state-space models to estimate the pass-through of oil price changes to consumer prices for a large sample of countries from 1970 to 2017. By controlling for self-selection bias and endogeneity and allowing for different responses to positive and negative price changes, we asses the differences between explicit inflation targeting (IT) countries and a control group. Surprisingly perhaps, our results suggest that the pass-through is higher for IT countries. Our main contribution is to show that these is mainly due to IT countries having a significant higher pass-through than non-IT countries when the oil price decreases: a 10% drop in oil price leads about a 0.11% drop in inflation in ITers (of which 4pp are explained by the monetary regime). Importantly, we show that adopting IT reduces the asymmetry of the pass-through. We run several robustness checks and conclude that falling oil prices are more welcomed by the central banks with an IT framework, in particular during deflationary episodes or when inflation is above the target.

Stakeholder Mapping and Analysis of the Renewable Energy Industry in Indonesia

The development of renewable energy in Indonesia is still in a relatively fledgling state, yet it is forecast to increase. The Government of Indonesia has formulated and implemented several strategic programs, compiled under several binding frameworks, namely the National Energy Policy and the General Plan for National Energy. The government is committed internationally to reduce its greenhouse gas emissions as part of its Nationally Determined Contributions. However, unearthing the dynamics of renewable and sustainable energy in Indonesia requires a detailed stakeholder analysis of all relevant and major actors. This paper aims to provide a stakeholder analysis of actors in the renewable and sustainable energy sector in Indonesia as a whole, using a Political, Economic, Social, Technological, Legal and Environmental (PESTLE) analysis methodology. The results have indicated that existing policies are not yet perfect, given that the renewable energy industry is still quite minimal, especially in the current conditions of falling oil prices. In the future, it is hoped that the government can formulate a breakthrough policy to improve existing policies in the renewable energy sector, such as by giving ease to investors in the renewable energy sector, including the effective and efficient supply chain management of renewable energy.

The World Economy

Recent data suggests that the global growth cycle has probably peaked. We forecast world GDP growth of around 3.5 per cent a year over the next two years.On that basis, the second decade of the 21st century will have seen sustained global GDP growth.Tariff increases and trade disputes seem likely to act as a drag on the global economic outlook, with a bias towards slower growth as a consequence.Despite faster wage growth in advanced economies, the recent fall in oil prices has reduced the risks of inflation overshooting targets. We expect central banks to reduce monetary accommodation very gradually.

Nigerian Economy: Business, Governance and Investment in Period of Crisis

Nigerian economy is very sensitive to happenings in the global crude oil market due to Nigeria dependence on the black gold. The recession Nigeria found herself in 2016 was mainly caused by the fall in the international price of crude oil. It is the same factor that also help to explain Buhari government massive borrowings to help close the gap in government budget since coming to power in 2015. In the years since independence, Nigerian economy has changed from its largely agrarian state of 1960s to an import depended mono-economy. Nigeria single most important export for more than forty years has remain crude oil. But, in the period since independence various economic models have been tested, as many as there were changes in governments. While the adaptation of some of these economic programs were domestically inspired, others were forced on Nigeria from the outside. The book provides a comprehensive account of Nigerian economy, taking into consideration the changes that have taken place in the last one decade.

Oil Price and Exchange Rate Nexus-Evidence From Nigeria

Price swings at international crude oil market significantly impact on macroeconomic fundamentals of oil dependent countries. Hence, understanding the relationship between oil price movement and the exchange rate has become imperative especially for oil exporting countries. This paper examines the causal effect between oil prices and Nigerian naira–US dollar exchange rate using frequency daily data for the period 12/07/2010-31/08/2017. Generalized autoregressive conditional heteroskedasticity (GARCH) and exponential GARCH (EGARCH) models were used to estimate our oil prices and nominal naira exchange rate equation. Our findings reveal a positive relation between oil price and naira exchange rate meaning that an upward movement in the price of oil causes the naira to depreciate. Conversely, any fall in oil price leads to appreciation in the value of the naira. The result has important policy implication given that 90% of the total annual foreign revenue of Nigeria comes from oil thus oil price shocks have severe impact on the Nigerian economy. This justifies the need for Nigeria’s economic diversification to minimize the vulnerability of the Nigerian economy to vagaries of the international crude oil market and to delink the exchange rate and reserve movement from developments in oil prices.

Prospects of Solar Energy in Oman: case of oil and gas industries

The recent fall in oil prices made oil and gas companies to rethink their production strategies and optimize their expenses, while at same time, optimally extract oil in a cost effective way. A combination of rising oil demand and declining supply from the conventional sources is drawing global attention to the vast heavy-oil resources. Heavy oil are commonly developed with steam-based processes which, in most cases, burn fossil fuel to generate the required steam. However, tightening constraints on fuel, water, and the environment are some of the factors currently fuelling the interests to enhance the traditional steaming operations. The use of renewable energy system is the best alternative to achieve reduction of the high cost of energy supply and carbon emission. This paper presents prospects of solar farm steam generator based technology, in the southern part of Oman, where the requirement of steam for oil exploration is high. The Amal and Amin oil fields were used as case studies. The solar steam generator model was analyzed considering some of the technical designs in the enhanced oil recovery process, compared to traditional schemes used for oil extraction. With installation of solar based steam generators, gas consumption for steam generation and environmental pollution would be reduced substantially. Â Also, some of the benefits and challenges of the concentrating solar power steam technology employed were highlighted. The opportunities the solar farm could offer to the Sultanate in general were discussed.

Managing political risk in the oil and gas industry in a developing economy: the case of BP in Angola

Drawing on a case research methodology, this paper analyses political risk for oil firms in the Republic of Angola. The dramatic fall in oil prices, coupled with the existing social inequalities, have substantially increased the risk of political instability, macroeconomic instability, regulatory changes and social dissent. These factors are exacerbated by the actions and, in some cases, inaction of the government and other political players. By focusing on a specific case firm, BP, we analyse the organisational processes used by this European firm to manage political risk in Angola and compare it with an existing framework for political risk management. We conducted semi-structured interviews with political risk management professionals within the firm and a review of corporate documents provided by the firm to ensure the qualitative analysis achieves more consistent results. Despite having a political risk management culture embedded in their strategies and plans, our findings show that political risk management is not completely developed yet.

Growth Accounting for Saudi Arabia

Saudi Arabia is a capital and energy-intensive economy and also dependent on expatriate labor. With the recent fall in oil prices, the Kingdom is actively pursuing structural transformation. The study identifies a research gap in estimating the contribution of labor and capital to the Saudi Arabian economy. This study focuses on estimating the relative contribution of major long-term determinants of economic growth. With the support of the auto-regressive distributed lag model (ARDL), the study establishes a co-integrating relationship between real gross domestic product (GDP), investment expenditure, labor force and education expenditure in Saudi Arabia. The study notices that the maximum contribution to real GDP growth in Saudi Arabia is from the labor force. The minimum contribution to real GDP growth comes from investments in the predominant oil sector. This study identifies the mechanisms to make the localization program successful. The study recommends further diversification in productive sectors to gain benefit from new investments and suggests cutting down the unproductive expenditure in education.