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Oil Price Dynamics Report: The Increase in Residual Caused A Rise in Oil Prices Over The Past Week
Oil Price Dynamics Report: The Increase in Residual Caused A Rise in Oil Prices Over The Past Week
The increase in residual caused a rise in oil prices over the past week.
∎ While a slight loosening in supply offset higher demand, the ∎ Developments in global demand expectations since 2017:Q3
increase in residual ultimately caused oil prices to go up this have reversed the largely supply-induced weakness in oil prices
past week. In 2018:Q2, increasing demand expectations and throughout the first half of 2017.
decreasing anticipated supply led to rising oil prices.
∎ Overall, since the end of 2014:Q2, both lower global demand
expectations and looser supply have held oil prices down, though
this trend seems to have reversed in 2016:Q2 and 2016:Q4, and
notably since 2017:Q3.
Our analysis of oil price movements does not necessarily represent the views of the Federal Reserve Bank of New York, the Federal Reserve System,
or the Federal Open Market Committee.
New York Fed / Research & Statistics Group ©2018 Federal Reserve Bank of New York Oil Price Dynamics Report / September 4, 2018 1
Cumulative Weekly Decomposition, Apr 06-Aug 31, 2018 Recent Decomposition Data
Percentage change ∎ The chart at left depicts the cumulative oil price decomposition
30
Brent price from April 6, 2018.
Apr 6, 2018
20
$67.11 ∎ The table below presents the most recent cumulative values.
Brent crude
price
10 Demand Cumulative Percentage Changes since April 6, 2018
Supply Residual
0 Demand Supply Rest Brent
Aug 17, 2018 6.3 -1.7 2.3 6.8
-10
Aug 24, 2018 9.5 -0.3 3.1 12.2
Aug 31, 2018 10.1 -0.9 5.1 14.3
-20
Apr 6 May 6 Jun 6 Jul 6 Aug 6
Sources: Authors’ calculations; Haver Analytics; Thomson Reuters; Bloomberg L.P.
Notes: Residual reflects price movements unexplained by supply and demand factors.
Supply, demand, and residual sum to Brent crude price.
-25 Demand
-50 Supply
-75
New York Fed / Research & Statistics Group ©2018 Federal Reserve Bank of New York Oil Price Dynamics Report / September 4, 2018 2
Oil Price Decomposition Q&A
New York Fed / Research & Statistics Group ©2018 Federal Reserve Bank of New York Oil Price Dynamics Report / September 4, 2018 3