Our oil price decomposition, reported weekly, examines what’s behind recent fluctuations in oil prices: demand factors, supply factors, or some combination of the two?
(from the Federal Reserve Bank of New York)
Highlights
Oil prices increased over the past week, mostly owing to lower supply.
- Over the past week, a decrease in anticipated supply and, to a lesser extent, an increase in demand expectations resulted in higher oil prices. In 2021:Q4, oil prices decreased as increased anticipated supply outstripped the effect of an improving demand outlook.
- In 2021:Q3, oil prices rose owing to increased demand and decreased supply. Rising demand expectations were the main cause of higher oil prices in 2021:Q1 and 2021:Q2. In 2020:Q1, oil prices plummeted owing to decreased demand and increased supply, whereas in 2020:Q2, oil prices rose owing to increased demand. Increased supply led to falling oil prices in 2020:Q3, and this reversed in 2020:Q4, as oil prices rose owing to increased demand and decreased supply.
- 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. Oil prices rose in 2019 due to increasing demand expectations.
Read the full report [Archived PDF].
View the data [Archived Excel XLS].