Oil Markets and Price Movements: A Survey of Models

63 Pages Posted: 11 Jun 2013

See all articles by Hillard Huntington

Hillard Huntington

Stanford University - Energy Modeling Forum

Saud Al-Fattah

Saudi Aramco; King Fahd University of Petroleum and Minerals (KFUPM)

Zhuo Huang

National School of Development, Peking University

Michael Gucwa

Stanford University - Huang Engineering Center

Ali Nouri

Stanford University - Huang Engineering Center

Date Written: June 10, 2013

Abstract

During the 1970s, oil market models offered a framework for understanding the growing market power being exercised by major oil producing countries. Few such models have been developed in recent years. Moreover, most large institutions do not use models directly for explaining recent oil price trends or projecting their future levels. Models of oil prices have become more computational, more data driven, less structural and increasingly short run since 2004. Quantitative analysis has shifted strongly towards identifying the role of financial instruments in shaping oil price movements. Although it is important to understand these short-run issues, a large vacuum exists between explanations that track short-run volatility within the context of long-run equilibrium conditions. The theories and models of oil demand and supply that are reviewed in this paper, although imperfect in many respects, offer a clear and well-defined perspective on the forces that are shaping the markets for crude oil and refined products.

Keywords: Oil models, oil prices, supply and demand analysis, financial markets

Suggested Citation

Huntington, Hillard and Al-Fattah, Saud and Huang, Zhuo and Gucwa, Michael and Nouri, Ali, Oil Markets and Price Movements: A Survey of Models (June 10, 2013). USAEE Working Paper No. 13-129, Available at SSRN: https://ssrn.com/abstract=2277330 or http://dx.doi.org/10.2139/ssrn.2277330

Hillard Huntington

Stanford University - Energy Modeling Forum ( email )

475 Via Ortega
Stanford, CA 94305-4121
United States

Saud Al-Fattah (Contact Author)

Saudi Aramco ( email )

Dhahran, 31311
Saudi Arabia
00966504984090 (Phone)

HOME PAGE: http://www.saudalfattah.com

King Fahd University of Petroleum and Minerals (KFUPM) ( email )

Dhahran, 31311
Saudi Arabia
00966504984090 (Phone)

HOME PAGE: http://www.saudalfattah.com

Zhuo Huang

National School of Development, Peking University ( email )

No. 38 Xueyuan Road
Haidian District
Beijing, Beijing 100871
China

Michael Gucwa

Stanford University - Huang Engineering Center ( email )

475 Via Ortega
Stanford, CA 94305-4121
United States

Ali Nouri

Stanford University - Huang Engineering Center ( email )

475 Via Ortega
Stanford, CA 94305-4121
United States

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