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Oil prices rose over the past week owing to decreased supply and increased demand.
∎ Over the past week, a decline in anticipated supply as well as an ∎ Oil prices rose in 2019:Q1 due to increasing demand expectations,
increase in demand expectations resulted in higher oil prices. In whereas in 2019:Q2-Q3 higher anticipated supply drove prices
2020:Q1, oil prices plummeted owing to decreased demand and down. In 2019:Q4, oil prices rose owing to improving demand
increased supply. expectations.
∎ Overall, between 2014 and 2017, both lower global demand
expectations and higher anticipated supply held oil prices
down. Since mid-2017, this trend reversed as stronger demand
expectations and stabilizing anticipated supply drove oil prices
higher. This lasted until 2018:Q4 when weaker demand lowered
prices.
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 ©2020 Federal Reserve Bank of New York Oil Price Dynamics Report / May 26, 2020 1
Cumulative Weekly Decomposition, Jan 03-May 22, 2020 Recent Decomposition Data
Log changes, percent
10 ∎ The chart at left depicts the cumulative oil price decomposition
0 from January 3, 2020.
-10
Residual ∎ The table below presents the most recent cumulative values.
-20
-30 Demand
-40 Supply
-50 Cumulative Percentage Changes since January 3, 2020
-60 Brent crude
-70 price Demand Supply Rest Brent
-80
-90
May 08, 2020 -23.6 -48.6 -7.3 -79.5
-100 Brent price May 15, 2020 -25.1 -47.8 -1.8 -74.7
-110 Jan 3, 2019
$69.08 May 22, 2020 -21.8 -45.5 0.3 -66.9
-120
Jan 3, 2020 Feb 3, 2020 Mar 3, 2020 Apr 3, 2020 May 3, 2020
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.
-100
-150
Brent price
-200 Jan 8, 2010
$81.37
-250
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
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.
New York Fed / Research & Statistics Group ©2020 Federal Reserve Bank of New York Oil Price Dynamics Report / May 26, 2020 2
Oil Price Decomposition Q&A
New York Fed / Research & Statistics Group ©2020 Federal Reserve Bank of New York Oil Price Dynamics Report / May 26, 2020 3