Assessing the Factors Behind Oil Price Changes

39 Pages Posted: 1 Feb 2008  

Stephane Dees

European Central Bank (ECB)

Audrey Gasteuil

Société Générale

Robert Kaufmann

Boston University - Center for Energy & Environmental Studies, Department of Geography and Environment

Michael Mann

Boston University - Center for Energy & Environmental Studies - Department of Geography and Environment

Date Written: January 2008

Abstract

The rapid rise in the price of crude oil between 2004 and the summer of 2006 are the subject of debate. This paper investigates the factors that might have contributed to the oil price increase in addition to demand and supply for crude oil, by expanding a model for crude oil prices to include refinery utilization rates, a non-linear effect of OPEC capacity utilization, and conditions in futures markets as explanatory variables. Together, these factors allow the model to perform well relative to forecasts implied by the far month contracts on the New York Mercantile Exchange and are able to account for much of the $26 rise in crude oil prices between 2004 and 2006.

Keywords: Oil prices, Refinery industry, OPEC

JEL Classification: C53, Q41

Suggested Citation

Dees, Stephane and Gasteuil, Audrey and Kaufmann, Robert and Mann, Michael, Assessing the Factors Behind Oil Price Changes (January 2008). ECB Working Paper No. 855. Available at SSRN: https://ssrn.com/abstract=1080247

Stephane Dees (Contact Author)

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Audrey Gasteuil

Société Générale ( email )

Paris-La Défense, Paris 92987
France

Robert Kaufmann

Boston University - Center for Energy & Environmental Studies, Department of Geography and Environment ( email )

Boston University
Boston, MA 02215
United States

Michael Mann

Boston University - Center for Energy & Environmental Studies - Department of Geography and Environment

Boston University
Boston, MA 02215
United States

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