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


Cross, JL and Nguyen, BH and Tran, TD, The role of precautionary and speculative demand in the global market for crude oil, Journal of Applied Econometrics ISSN 0883-7252 (2022) [Refereed Article]

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DOI: doi:10.1002/jae.2905


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.

Item Details

Item Type:Refereed Article
Keywords:oil prices, time series, uncertainty, speculation
Research Division:Economics
Research Group:Applied economics
Research Field:Macroeconomics (incl. monetary and fiscal theory)
Objective Division:Economic Framework
Objective Group:Microeconomics
Objective Field:Supply and demand
UTAS Author:Nguyen, BH (Dr Bao Nguyen)
ID Code:150226
Year Published:2022
Deposited By:Economics
Deposited On:2022-06-03
Last Modified:2022-06-20

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