The Oil Markets: Let the Data Speak for Itself

In summary, our position paper argues that with the fundamental supply-and-demand balance so tight and that with effective OPEC spare capacity so low it is logical to see very high prices to ration demand and/or encourage additional supply. That is the job and message of price, even if the message is unpopular.

Author(s) :

Hilary Till

Research Associate at the EDHEC Risk and Asset Management Research Centre,Co-Founder of Premia Capital Management, LLC

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.
Pdf
The Oil Markets: Let the Data Speak for Itself...
(5.53 MB)
Type : Position paper
Date : le 06/10/2008
Extra information : Ce document constitue une synthèse de travaux scientifiques conduits au sein de l'EDHEC. Pour plus d'informations, nous vous prions de vous adresser à Séverine Anjubault de la direction de la recherche de l'EDHEC : severine.anjubault@edhec.edu Les opinions exprimées sont celles de l'auteur et n'engagent pas la responsabilité de l'EDHEC.
Research Cluster : Finance

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