Q41 - Demand and Supply

• The Simple Economics of Global Fuel Consumption

  Staff Working Paper 2019-35 Doga Bilgin, Reinhard Ellwanger

  This paper presents a structural framework of the global oil market that relies on information on global fuel consumption to identify flow demand for oil. We show that under mild identifying assumptions, data on global fuel consumption help to provide comparatively sharp insights on elasticities and other key structural parameters of the global oil market.

  Content Type(s): Staff Research, Staff Working Papers Topic(s): Economic models JEL Code(s): C, C5, C51, L, L7, L71, Q, Q4, Q41, Q43

• A Structural Model of the Global Oil Market

  Staff Analytical Note 2019-17 Reinhard Ellwanger

  This note presents a structural vector autoregressive (SVAR) model of the global oil market. The model identifies four types of shocks with different economic interpretations: oil supply shocks, oil-market-specific demand shocks, storage demand shocks and shocks to global economic growth.

  Content Type(s): Staff Research, Staff Analytical Notes Topic(s): Economic models JEL Code(s): Q, Q4, Q41, Q43

• Modeling Fluctuations in the Global Demand for Commodities

  Staff Working Paper 2018-4 Lutz Kilian, Xiaoqing Zhou

  It is widely understood that the real price of globally traded commodities is determined by the forces of demand and supply. One of the main determinants of the real price of commodities is shifts in the demand for commodities associated with unexpected fluctuations in global real economic activity.

  Content Type(s): Staff Research, Staff Working Papers Topic(s): Econometric and statistical methods, International topics JEL Code(s): F, F4, F44, Q, Q1, Q11, Q3, Q31, Q4, Q41, Q43
• November 16, 2017

  Factors Behind the 2014 Oil Price Decline

  Bank of Canada Review - Autumn 2017 Reinhard Ellwanger, Benjamin Sawatzky, Konrad Zmitrowicz

  Oil prices have declined sharply over the past three years. While both supply and demand factors played a role in the large oil price decline of 2014, global supply growth seems to have been the predominant force. The most important drivers were likely the surprising growth of US shale oil production, the output decisions of the Organization of the Petro-leum Exporting Countries and the weaker-than-expected global growth that followed the 2009 global financial crisis.

  Content Type(s): Publications, Bank of Canada Review Article Topic(s): Business fluctuations and cycles, International topics, Recent economic and financial developments JEL Code(s): Q, Q4, Q41, Q43
• November 17, 2016

  Commodity Price Supercycles: What Are They and What Lies Ahead?

  Bank of Canada Review - Autumn 2016 Bahattin Buyuksahin, Kun Mo, Konrad Zmitrowicz

  Because commodity prices help determine Canada’s terms of trade, employment, income and, ultimately, inflation, it is important to understand what causes them to fluctuate. Since the early 1900s, there have been four commodity price supercycles—which we define as extended periods of boom and bust that can take decades to complete. Now in its downswing phase, the current supercycle started after growth in China and other emerging-market economies in the mid-1990s resulted in an unexpected demand shock. The extent of this downswing depends on numerous factors that are presently uncertain.

  Content Type(s): Publications, Bank of Canada Review Article Topic(s): Econometric and statistical methods, International topics JEL Code(s): C, C1, Q, Q1, Q4, Q41

• Low for Longer? Why the Global Oil Market in 2014 Is Not Like 1986

  Staff Analytical Note 2016-11 Bahattin Buyuksahin, Reinhard Ellwanger, Kun Mo, Konrad Zmitrowicz

  In the second half of 2014, oil prices experienced a sharp decline, falling more than 50 per cent between June 2014 and January 2015. A cursory glance at this oil price crash suggests similarities to developments in 1986, when the price of oil declined by more than 50 per cent, initiating an episode of relatively low oil prices that lasted for more than a decade.

  Content Type(s): Staff Research, Staff Analytical Notes Topic(s): International topics, Recent economic and financial developments JEL Code(s): E, E3, Q, Q4, Q41, Q43

• A Blessing in Disguise: The Implications of High Global Oil Prices for the North American Market

  Staff Working Paper 2013-23 Ron Alquist, Justin-Damien Guénette

  We examine the implications of increased unconventional crude oil production in North America. This production increase has been made possible by the existence of alternative oil-recovery technologies and persistently elevated oil prices that make these technologies commercially viable.

  Content Type(s): Staff Research, Staff Working Papers Topic(s): International topics, Recent economic and financial developments JEL Code(s): Q, Q4, Q41, Q43, Q47

• Growth in Emerging Market Economies and the Commodity Boom of 2003–2008: Evidence from Growth Forecast Revisions

  Staff Working Paper 2012-8 Elif Arbatli, Garima Vasishtha

  Demand for industrial raw materials from emerging economies, particularly emerging Asia, is widely believed to have fueled the surge in oil and industrial commodity prices during 2002-2008. The paper first presents a simple storage model in which commodity prices respond to market participant’s changing expectations of the future macroeconomic environment.

  Content Type(s): Staff Research, Staff Working Papers Topic(s): Econometric and statistical methods, International topics JEL Code(s): Q, Q4, Q41, Q43

• The Role of Financial Speculation in Driving the Price of Crude Oil

  Staff Discussion Paper 2011-6 Ron Alquist, Olivier Gervais

  Over the past 10 years, financial firms have increased the size of their positions in the oil futures market. At the same time, oil prices have increased dramatically.

  Content Type(s): Staff Research, Staff Discussion Papers Topic(s): International topics JEL Code(s): G, G1, G12, Q, Q4, Q41

• The Outlook for the Global Supply of Oil: Running on Faith?

  Staff Discussion Paper 2009-9 Olivier Gervais, Ilan Kolet

  The dramatic reduction in global demand, and the decline in the spot price of crude oil in the second half of last year, may have significant implications for the future supply of oil. Investments in conventional methods of extraction have been constrained, since easily accessible oil reserves are typically concentrated in countries with geopolitical uncertainty and/or state-run oil companies.

  Content Type(s): Staff Research, Staff Discussion Papers Topic(s): Business fluctuations and cycles, Inflation and prices, International topics JEL Code(s): Q, Q4, Q41, Q43