Global Crude Oil Price Research Articles

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

SummaryContemporary 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.

Sensitivity of Crude Oil Price Change to Major Global Factors and to Russian–Ukraine War Crisis

To assess the elasticity of crude oil price to global factors related to supply of crude oil and the US dollar exchange rate, the authors employed nonlinear models including flexible least squares, and maximum likelihood estimator, in addition to OLS regression mode; using yearly data from 1965 to 2021. The findings indicate change in oil prices due to 1% change in any of the explanatory variables, as follows: the effect of the US dollar depreciation rate, raise crude oil price/barrel by 71 US cents; and increase in OPEC production, decrease crude oil price by 82 US cents; a decrease in non-OPEC production, raise oil price by 4.78 US$. These results imply that, if a ban imposed on Russian crude oil export, and no increase in OPEC production to compensate Russian oil loss in the international markets, global crude oil price expected to rise by 88 US$ above its level before Russian–Ukraine crisis, meaning that crude oil price expected to rise at 160 US$ pbab. However, if OPEC members increase their output level by 10 million barrels per day to compensate the Russian oil loss, then global crude oil price is expected to stay at 102 US$ pb.

Sensitivity of crude oil price change to major global factors and to Russian-Ukraine war crisis

To assess the elasticity of crude oil price to global factors related to supply of crude oil and the US dollar exchange rate, we employed nonlinear models including flexible least squares (FLS), and maximum likelihood estimator (MLE), in addition to OLS regression mode; using yearly data from 1965 to 2021. Our findings indicate change in oil prices due to 1% change in any of the explanatory variables, as follows: the effect of the US dollar depreciation rate, raise crude oil price/barrel by 71 US cents; and increase in OPEC production, decrease crude oil price by 82 US cents; a decrease in non-OPEC production, raise oil price by 4.78 US$. These results imply that, if a ban imposed on Russian crude oil export, and no increase in OPEC production to compensate Russian oil loss in the international markets, global crude oil price expected to rise by 88 US$ above its level before Russian–Ukraine crisis, meaning that crude oil price expected to rise at 160 US$ pb[1][2]. However, if OPEC members increase their output level by 10 million barrels per day to compensate the Russian oil loss, then global crude oil price expected to stay at 102 US$ pb.

Production of Ethyl-alcohol using Saccharomyces Cerevisiae from Potato

The steady rise in global crude oil prices, the increase in threats to the environment due to air pollution, global warming, and the threat of crude oil prices have had a shattering effect on developing countries, especially in oil-imported countries such as India. From a long-term point of view, it is mandatory to manufacture more fuelefficient fuels. Ethyl-alcohol is esteemed source of energy. Maize is a major source of ethyl-alcohol because of its high starch content in seeds and grains. Ethyl-alcoholis a renewable alcohol-based fuel that can be produced from starch, sugar, and cellulosic biomass. The present study of our review focuses on production of ethyl-alcoholfrom potato thus obtaining the energy-efficient effect of ethyl-alcoholsynthesis. A variety of substances can be used for ethyl-alcohol production. Ethyl-alcohol based biofuels can be produced using agricultural waste with the help of enzymes. Ethyl-alcohol fuel derived from starchy and agricultural lignocelluloses biomass is gradually being upgraded to reduce petroleum consumption due to depletion of petroleum resources as well as reducing the impact of fuel in nature. In this review we are focusing on production of ethyl alcohol from ground potato using yeast (saccharomyces cerevisiae) and water as chemicals and reagent.

How do dynamic jumps in global crude oil prices impact China's industrial sector?

Given that sharply rising external risks pose great challenges to the stable development of China's industrial sector, extreme risks to the global oil market deserve more attention. This study investigated dynamic jumps in global oil prices and their impacts on China's industrial sector at the aggregate and subsector levels. We applied the asymmetric ARMA-EGARCH-ARJI model to analyze the characteristics of global oil price fluctuations and introduced the jump component into the ARMA-EGARCH-X model to examine the impacts of dynamic jumps on China's industrial sector. We distinguished oil price jumps under different oil market conditions to assess the asymmetric effect of jump shocks. We found that global oil price fluctuations contain both volatility clustering with asymmetry and dynamic jumps. At the aggregate level, oil price jumps have negative shocks on China's industrial sector returns and positive spillovers on its volatility. The impacts show hysteresis and will be reversely adjusted afterward, which implies an overreaction of the industrial market to current oil price jumps. Moreover, jump shocks display an asymmetric effect under different global oil market conditions, which is embodied by the fact that they will reduce industrial sector returns more when the oil price decreases than when it increases. The five industrial subsectors respond differently to oil price jump shocks. Our findings deserve particular attention from both market participants and policy makers.

Oil shocks and the U.S. economy in a data-rich model

Are all oil price shocks the same? We investigate the effects of three types of global crude oil price shocks using a factor augmented VAR framework and 185 monthly macroeconomic indicators from 1978 to 2017. Our results indicate that while both demand and supply driven oil price shocks lead to a significant increase in the global crude oil price and high degree of pass-through to US consumer and producer prices, oil specific precautionary demand shocks are the main drivers of fluctuations in the price of crude oil and the US price level, followed by global economic activity oil demand shocks. Further, while increases in the price of oil triggered by oil supply shocks lower US economic activity, those triggered by global economic activity oil demand shocks are associated with increased US economic activity. Our results suggest the need for monetary policy to stabilize the pass-through from global crude oil prices to domestic inflation.

FACTORS DETERMINING BALANCE OF TRADE IN INDIA

This paper aims to determine the major factors influencing Balance of Trade (BoT) of India over the last 40 years (1981-2019). The OLS method of regression analysis has been used in the paper to analyse the relationship between balance of trade of India and its determinants. It is found that four main factors influence balance of trade in India-Real Effective Exchange Rate (REER), real value of global crude oil prices, private investment in India, and GDP per capita of India. Global oil prices have a significant negative relationship with India’s trade balance. Investment, REER and GDP per capita have a significant positive relationship with India’s trade balance. Furthermore, trade balance of India has been exceptionally low in two years - 2011 and 2017 - mainly due to global financial crisis and global recession respectively. These years are captured by dummy variables in the regression model.

The response of the U.S. aviation industry to demand and supply shocks in the oil and jet fuel markets

The article disentangles shocks to the global crude oil and U.S. jet fuel markets into demand and supply shocks that underlie both markets, and then examines the effects of these shocks on the U.S. airline industry. I specify a block-recursive structural vector autoregressive (VAR) model that allows for global crude oil market variables to affect the jet fuel market contemporaneously, but not vice versa. Impulse response functions show that oil supply shocks have no significant impact on oil and jet fuel prices, while aggregate demand and precautionary demand shocks cause oil and jet fuel prices to rise. In addition, my results indicate that jet fuel shocks, whether demand or supply, have no significant effects on global crude oil prices. On the other hand, jet fuel demand and supply shocks both significantly increase the price of jet fuel. Furthermore, jet fuel demand shocks have positive impacts on the U.S. aviation industry, while the effects of jet fuel supply shocks are generally negative.

Exploring relationship between crude oil price volatility and stock indices movement using wavelet analysis: evidence from India and China

Purpose This study aims to explore the linkage between fluctuations in the global crude oil price and equity market in fast emerging economies of India and China. Design/methodology/approach The present research uses wavelet decomposition and maximal overlap discrete wavelet transform (MODWT), which decompose the time series into various frequencies of short, medium and long-term nature. The paper further uses continuous and cross wavelet transform to analyze the variance among the variables and wavelet coherence analysis and wavelet-based Granger causality analysis to examine the direction of causality between the variables. Findings The continuous wavelet transform indicates strong variance in WTIR (return series of West Texas Instrument crude oil price) in short, medium and long run at various time periods. The variance in CNX Nifty is observed in the short and medium run at various time periods. The Chinese stock index, i.e. SCIR, experiences very little variance in short run and significant variance in the long and medium run. The causality between the changes in crude oil price and CNX Nifty is insignificant and there exists a bi-directional causality between global crude oil price fluctuations and the Chinese equity market. Originality/value To the best of the authors’ knowledge, very limited work has been done where the researchers have analyzed the linkage between the equity market and crude oil price fluctuations under the framework of discrete wavelet transform, which overlooks the bottleneck of non-stationarity nature of the time series. To bridge this gap, the present research uses wavelet decomposition and MODWT, which decompose the time series into various frequencies of short, medium and long-term nature.

Sustainability of Global Economic Policy and Stock Market Returns in Indonesia

Interdependence in trade and financial globalization has increased the vulnerability of developed and developing countries to external shocks alike, whereas emerging markets are more vulnerable to the shocks originating from the world’s leading economies. This paper investigates the impact of the uncertainty from the global economic policy on the return of the Indonesian stock market by using the time-varying correlation based on the rolling window method and time-varying built dynamic conditional correlation method. Both the rolling window and condition correlation estimates indicate that the correlation between global policy uncertainty and Indonesian stock returns is time-varying. The results of the autoregressive distributed lag-based regression indicate that inflation, global crude oil prices, gross domestic product, and world crude oil production have significant impacts on the dynamic conditional correlation. The average negative estimate of time-varying correlation suggests that investors when faced with liquidity constraints in one country may sell off their assets in another country to raise funds in order to meet their future financial needs. This also indicates that the rise in the uncertainty of economic policy in developed markets has a negative impact on the shocks faced by the Indonesian stock market. Based on our empirical findings, it is recommended that Indonesian policymakers should place more focus on the sustainability of the economic growth, pay close attention to volatile crude oil prices, world crude oil production, and inflation so as to avoid dynamic interaction between the uncertainty of economic policy in the developed markets and the return of the Indonesian stock market.

Crude Oil Price Shock and the Nigerian Stock Market Performance in the Face of Covid-19 Pandemic Evidence from ARDL & Granger Causality Approach

The study examined empirically the linear relationship between crude oil price shock and the Nigerian stock market performance, with the main objective of ascertaining the impact of the recent sharp decline in crude oil prices on stock market performance in the face of the global socio-economic challenge posed by COVID-19 pandemic. It used monthly time series data from the central bank of Nigeria (CBN) website (www.cbn.gov.ng) from 2017-2020 This period was chosen to capture the effects of changes in oil price on the performance of the Nigerian stock market within the context of the global economic challenges due to the COVID-19 pandemic. The auto-regressive distributed lag ARDL approach has been applied in the model specification and data analysis for the study. The results of the ARDL in both the short and long run revealed that the recent crude oil price shock has a significant impact on stock market performance in Nigeria. The results of the granger causality test also reveal a unidirectional causality from crude oil price to stock market performance with a piece of evidence from the current decline of global crude oil prices from December 2019 to April 2020. The study, therefore, suggests the need for the Nigerian capital market to continue to pursue with vigor the implementation of the capital market master plan in the hope that a more developed capital market should be able to absorb external shocks such as those arising from crude oil price fluctuations.

The Mirror of Malaysia Real Estate Investment Trust Stock Return in the Short-Run Dynamics

The formation of Islamic capital market under the subcomponent of Islamic financial system scratch a milestones development of Islamic finance in Malaysia. The Islamic capital market operates in mirror with convention capital market in expending, deepening and broadening Malaysia financial system. Malaysia is one of the REIT markets that value both the Islamic and conventional practices, such flexibility makes the attract not only to the local investor but also Islamic investors and foreign investor. The major source that generates income for REIT is the rental of the commercial real estate invested and hold as portfolio by the REIT management company. Furthermore, Malaysia REIT is known to be defensive stocks which consist of cyclic income producing assets that has some potential of asset appreciation. On the other hand, it witnessed by the moderation of Malaysia government bond yields created a lower pressure on the REIT stock price and analyst’s report highlighted the uncertainties on global crude oil prices and inflation is main concerned to REIT investors. In addition, the revision of 2019 tax system in Malaysia furnished a long run affected the dividend payout and volatility of REIT stock price. Therefore, this impact on the REIT stock liquidity and trading volume experiencing anil liquid trading. Therefore, the impact of external forces towards the mirror of two type of Malaysia REITs is significant to the investors, policy makers and government to outline the short-run relationship and facilitate future growth. The Vector auto regression model, granger causality and variance decomposition employed in this study to analyze the mirror of two types Malaysia REIT stock return. The empirical finding shows that the variability of dividend yield is vital explanatory variables to explain the both type of REIT stock return in Malaysia followed by interest rate for Islamic REIT stock return. The mirror of conventional REIT further implicated that trading volume and global crude oil price are useful to forecasting the changes in the stock return. Nutshell, this study provides a discussion of Malaysia REIT stock return behavior and it should be given necessary attention by researchers in ensuring the newly develop Islamic REIT are competitive and stability as the conventional REIT.

Appraisal of Self-Assessment Tax Policy in Nigeria

Implementation of self-assessment policy is seen as enhancing tax revenue generation, reducing operational cost and operating in line with international best practices. This study was designed to appraise the self-assessment tax policy in Nigeria by exploring income streams from CIT, PPT, VAT against GDP (at current basic prices) and annual budgets from 2002 to 2019. The study applying Ordinary Least Square statistics revealed the tax streams impacted GDP both in the pre and post self-assessment periods though their impacts varied. The efficiency of the implementation of the self-assessment policy tested using tax to GDP ratio and tax to budget ratio revealed pre self-assessment period performing better than the post self-assessment period as pre self-assessment period tax to GDP ratio is 6.63 per cent as against post self-assessment period tax to GDP ratio of 4.23 per cent. Also, pre self-assessment period tax to budget ratio is 119.62 per cent as against post self-assessment period ratio of 92.18 per cent. This is attributable to decline in performance during the post self-assessment period as a result of reduction in petroleum profit taxes occasioned by decline in taxable profits of companies operating in the petroleum sub-sector due to slump in global crude oil prices. The study also found Nigeria’s tax to GDP ratio to be far below average in other regions and the lack of harmonization of tax revenues by States and the federal government for a realistic evaluation.

An Empirical Investigation into the Effect of Global Oil Price on Nigeria Gross Domestic Product from (2000-2019)

Nigeria is one of the largest oil producing countries in the world, its revenue is largely dependent on crude oil sales. The country vulnerability to crude oil price fluctuations is a phenomenon that has been a reoccurring event Thus; this study aims to examine the impact of Global crude oil prices on Nigeria gross domestic product (GDP) and the economy at large. The study relied deeply on secondary data obtained from the Central bank of Nigeria (CBN). The data were subjected to simple regression analysis, Pearson Product Moment Correlation to determine the effect and relationship between oil price (Independent Variable) and Nigeria GDP (dependent variables). And time series analysis was also used to examine the trend in the data set and fit a more parsimonious model that would aid forecasting of future crude oil price and GDP. The study found that Global crude oil price have a significant correlation with Nigeria gross domestic product, %58.1 of variation in Nigeria gross domestic product is attributed to fluctuation in Global crude oil price and Nigeria GDP will increase by ₦4.21bn per unit increase in crude oil price. The study thus conclude that global crude oil price has a significant impact on Nigeria GDP and its economy at large. The study among others recommend diversification of the Nigerian economy is most imperative given the economic recession in the country now and the impending take-over of the transportation industry by electric vehicles. Keywords: Oil price, Gross domestic product, Economy, Price shock, Exchange rate, Nigeria. DOI: 10.7176/EJBM/13-4-03 Publication date: February 28 th 2021

Integrated Performance Evaluation and Strategic Implication Report on Z Energy Limited

Z Energy Limited is a New Zealand-based fuel company, founded in 2010. In 2013, Z Energy became a listed company on the NZX, and also started to trade on the Australian Stock Exchange publicly. This report focuses on Z Energy’s non-financial performances and how they affect company’s value. Z Energy has been devoting itself to sustainable development while the actual performances were usually under the expectations. On the other hand, Z needs to deal with the challenges raised from electric energy. Even though Z has been trying to positively respond to the market variations and expecting a promising future, the outcomes are less likely to be optimistic. From the macroeconomic perspective, Z is significantly influenced by global crude oil prices and forex rates, it is sensitive to the changes in market conditions. Although New Zealand has a low-inflation economic environment, the impact of international economic conditions will override the influence from the domestic market. However, Z has also made some achievements in supplying biofuels and developed a long-term cooperation with Fonterra. In addition, Z Energy has applied numerous methods, such as HSSE strategy, to improve employee involvement and loyalty, and adopts “Strengthen the Core” strategy to expand businesses.

Impact of crude oil price shocks on industrial output, inflation and exchange rate: evidence from five emerging Asian economies

The present study estimates the long-run relationship and impact of oil price shock on industrial production, inflation, and exchange rate of the selected fast-emerging Asian economies namely China, India, South Korea, Singapore and Japan. The study employs auto regressive distributed lag model, structural vector auto regression model, variance decomposition and impulse response function to examine the same. The ARDL model revealed the presence of cointegrating relationship between the macroeconomic variables of Asian economies and the global crude oil price. The impulse response function and variance decomposition analysis indicates the oil price fluctuations not having a significant impact on the given macroeconomic variables of the Asian economies taken under study. The study suggests that the Asian economies should implement policies to attract more FDI and promote the foreign sector. The governments should be more watchful while regulating the price level that may arise with a surge in oil price.

Comprehensive analysis of the effect of oil and non-oil revenues on economic growth in Nigeria

Revenue generation as the funding source for Nigeria's economic growth activities was challenging due to the government's mismanagement, tax avoidance, and corrupt practices due to the COVID-19 pandemic. The global crude oil prices declined. The challenges make Nigeria's federal government over-dependent on oil-generated revenues to experience several setbacks in achieving its economic growth goals. However, for the last decade, the Government has also diversified the economy and focus on the non-oil area. Thus, this study examined the effects of generating oil and non-oil revenues on Nigeria's economic growth from 1989 through 2018 using secondary data extracted in the Central Bank of Nigeria's statistical bulletin. The study employed the model for analytical co-integration and error correction. Similar analytical processes were applied to the multivariate data on components of oil and non-oil revenue, exchange rates, and real gross domestic products. Results generated indicated that the oil revenue harms real gross domestic products in Nigeria, but this is the same with effects reported from non-oil revenue. Nonetheless, Nigeria's exchange rate gives a positive sign and statistical significance for real gross domestic products. Consequently, the study opined that the continuing decline in global crude oil prices, resistance from insurgents in Nigeria's oil-producing area, the Nigerian Government's profligate expenditure, the global COVID-19 health pandemic, among other factors, are harming the economic growth of Nigeria.

Super basins—New paradigm for oil and gas supply

Super basins are sedimentary basins with more than 5 billion BOE cumulative production and at least 5 billion BOE remaining recoverable resources. Super basins are characterized by two or more source rocks, stacked reservoirs, mature infrastructure, established service sectors, large amounts of data, and access to markets. Super basins commonly have multiple operators that form a community whose competitive atmosphere helps drive efficiency and performance. In an effort to identify sources for future oil and gas supplies, studies of the geology, hydrocarbon richness, and above-ground factors for 400 global basins led to the super basin concept. Super basins have continuous organic-rich mud rocks and other tight reservoirs that heretofore were not considered commercial targets. Based on analogy with proven resource plays in North American super basins, it is now possible to unlock substantial hydrocarbon potential in these tight rocks by employing horizontal drilling and multistage fracturing technologies. Super basins exist both onshore and offshore. The largest super basins are onshore, dominantly in forelands and passive margins, and have both conventional and tight rock potential. This paper focuses on the top 25 onshore super basins that are estimated to have 859 billion BOE of incremental technically recoverable resources. Offshore basins do not have the massive tight rock potential as onshore basins because of higher infrastructure costs. The archetype for the onshore super basin is the Permian Basin (west Texas) with 37 billion BOE produced and 60 billion bbl of oil and 300 TCF gas remaining. With huge resources, super basins can serve as supply disrupters and act as a regulator for the global price of crude oil and natural gas. Super basin concepts have caused geoscientists to think differently about petroleum basins. Super basins should be viewed as ecosystems that have below- and above-ground questions and technology and market considerations that must be resolved to assure commercial success.

MANAGING STRESS IN A RECESSED ECONOMY: IMPLICATIONS FOR BANK EMPLOYEES

This study examines the notion of stress management in a recessed Nigerian economy with the implications for bank employees. In the process, it further considers the stiff competition in the banking sector coupled with the current sharp decline in the global price of crude oil with its attendant implications for the performance of the Nigerian economic growth which has a spillover effect on indwelt elements like stress factor facing the banking employee. Based on this foundational philosophy, 300 structured questionnaires were administered of which 218 were found usable and on which an in-depth analysis was conducted via the use of Statistical Package for Social Sciences’ (SPSS) data analysis; whilst Correlation and Regression analyses were applied to test the formulated hypotheses. The finding of the research effort affirms that stress issue in the workplace is of a growing concern particularly in the banking sub-sector. This development portends a detriment to the health and psychic of bank employees – and thus poses a great threat to work place performance. Further findings from the study; reveal amongst others; the potential stress-propelled debacle facing the bank employees in different dimensions. These include work overload, low level of job satisfaction (in spite of measurable remunerations and lack of autonomy–including job insecurity. The study recommends amongst others; that effective management of bank staffers require developing action plans by bank management that would entail monitoring, re-assessing (via feed-back mechanism) the dynamics of the internal workplace and the turbulent external environment. It concludes on the note that, where the optimum of an average bank employee is sought, the work environment should embrace his participation in decision making process at appropriate level of the affected organization. This is largely achievable through his engagement in state of the art training programs amongst other incentives.

Hybrid vector autoregression–recurrent neural networks to forecast multivariate time series jet fuel transaction price

Fuel cost is the most contributed component in the operational cost of all transportation modes. In the aviation industry, jet fuel cost contributed to a percentage of 33.33% of the total airline operational costs. To increase efficiency in operational costs and the airline should have jet fuel price monitoring systems that can forecast the future price and give some strategy recommendations to airlines. In this research, we propose many multivariate time series-based predictive analytics as a tool for the airline to monitor and forecast the jet fuel price transaction based on jet fuel transaction price. We consider the global crude oil price and also global and local jet fuel prices in each airport. We also consider additional variables for the economical aspect that applied differently for each airport location. We examine two Recurrent Neural Network (RNN) algorithm, Long Short Term Memory (LSTM) and Gate Recurrent Units (GRU). For minimizing the weakness of LSTM and GRU, we combine each methods with Vector Autoregression (VAR). After forecasting results using VAR-LSTM and VAR-GRU, we get forecasting accuracy of 98.98% and 99.40% respectively.