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- Title
The role of precautionary and speculative demand in the global market for crude oil.
- Authors
Cross, Jamie L.; Nguyen, Bao H.; Tran, Trung Duc
- Abstract
Summary: Contemporary 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.
- Subjects
PETROLEUM sales & prices; PETROLEUM; EXPORT marketing; STRUCTURAL models; SUPPLY & demand; PRICE fluctuations
- Publication
Journal of Applied Econometrics, 2022, Vol 37, Issue 5, p882
- ISSN
0883-7252
- Publication type
Academic Journal
- DOI
10.1002/jae.2905