The Oil Markets: Let the Data Speak for Itself

Presentation :

We discuss how many facets of the world oil market are too opaque, including future productive capacity estimates from important suppliers, inventory statistics from important non-OECD consumers, and summary position data from over-the-counter derivatives participants. For policymakers and their economists to make sound decisions, there must simply be more transparency in these markets. We take the position that the petroleum-complex futures markets contribute to the transparency of the oil markets. Even when fundamental data on the oil markets are sparse or opaque, large-scale supply-and-demand shifts leave footprints in futures-price relationships, from which one can potentially infer the market's fundamentals. Our paper provides several case-studies on this type of analysis. In the presence of active futures markets, an observer need not be a member of a cartel or a large corporation to gain insights into the oil market.