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    the price of crude oil saw an increase of 30% in 2018 over 2017, but due to the global economic crisis, fell by 20% in 2019. what was the overall % change in price between 2017 and 2019?

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    get the price of crude oil saw an increase of 30% in 2018 over 2017, but due to the global economic crisis, fell by 20% in 2019. what was the overall % change in price between 2017 and 2019? from screen.

    Seven Questions About The Recent Oil Price Slump

    Oil prices have plunged recently, affecting everyone: producers, exporters, governments, and consumers.

    Prices

    Seven Questions About The Recent Oil Price Slump

    Oil prices have plunged recently, affecting everyone: producers, exporters, governments, and consumers.

    Rabah Arezki, Olivier Blanchard

    December 22, 2014

    Overall, we see this as a shot in the arm for the global economy. Bearing in mind that our simulations do not represent a forecast of the state of the global economy, we find a gain for world GDP between 0.3 and 0.7 percent in 2015, compared to a scenario without the drop in oil prices. There is however much more to this complex and evolving story. In this blog we examine the mechanics of the oil market now and in the future, the implications for various groups of countries as well as for financial stability, and how policymakers should address the impact on their economies.

    In summary:

    We find both supply and demand factors have played a role in the sharp price decline since June. Futures markets suggest that oil prices will rebound but remain below the level of recent years. There is however substantial uncertainty about the evolution of supply and demand factors as the story unfolds.

    While no two countries will experience the drop in the same way, they share some common traits: oil importers among advanced economies, and even more so emerging markets, stand to benefit from higher household income, lower input costs, and improved external positions. Oil exporters will take in less revenue, and their budgets and external balances will be under pressure.

    Risks to financial stability have increased, but remain limited. Currency pressures have so far been limited to a handful of oil exporting countries such as Russia, Nigeria, and Venezuela. Given global financial linkages, these developments demand increased vigilance all around.

    Oil exporters will want to smooth out the adjustment by not curtailing fiscal spending abruptly. For those without savings funds and strong fiscal rules, budgetary and exchange rate pressures may, however, be significant. Without the right monetary policies, this could lead to higher inflation and further depreciation.

    The fall in oil prices provides an opportunity for many countries to decrease energy subsidies and use the savings toward more targeted transfers, and for some to increase energy taxes and lower other taxes.

    In the euro area and Japan, where demand is weak and conventional monetary policy has done most of what it can, central banks forward guidance is crucial to anchor medium term inflation expectations in the face of falling oil prices.

    Again, our simulations of the impact of the oil price drop do not represent a forecast for the state of the world economy in 2015 and beyond. This we will do in the IMF’s next World Economic Outlook in January, where we will also look at many other cross-currents driving growth, inflation, global imbalances and financial stability.

    What follows is our attempt to answer seven key questions about the oil price decline:

    What are the respective roles of demand and supply factors?

    How persistent is this supply shift likely to be?

    What are the effects likely to be on the global economy?

    What are likely to be the effects on oil importers?

    What are likely to be the effects on oil exporters?

    What are the financial implications?

    What should be the policy response of oil importers and exporters?

    What are the respective roles of demand and supply factors?

    Oil prices have fallen by nearly 50 percent since June, 40 percent since September (see Chart 1).[2] Metal prices, which typically react to global activity even more than oil prices, have also decreased but substantially less so than oil (see Chart 2). This casual observation suggests that factors specific to the oil market, especially supply ones, could have played an important role in explaining the drop in oil prices.

    A closer look reinforces this conclusion. Revisions between June and December of International Energy Agency forecasts of demand (see Chart 3), combined with estimates of the short run elasticity of oil supply, suggest that unexpected lower demand between then and now can account for only 20 to 35 percent of the price decline.

    On the supply side, the evidence points to a number of factors, including surprise increases in oil production. This is in part due to faster than expected recovery of Libyan oil production in September and unaffected Iraq production, despite unrest.[3]

    A major factor, however, is surely the publicly announced intention of Saudi Arabia—the biggest oil producer within OPEC—not to counter the steadily increasing supply of oil from both other OPEC and non-OPEC producers, and the subsequent November decision by OPEC to maintain their collective production ceiling of 30 million barrels a day in spite of a perceived glut.

    स्रोत : www.imf.org

    Impact of COVID

    This paper provides an analysis of crude oil, diesel, and gasoline prices for the period from November 1, 2019 to December 31, 2020. We apply Log Periodic Power-Law Singularity (LPPLS) and Discrete Scale LPPLS bubble indicators to explore the dynamic ...

    Resour Policy. 2021 Dec; 74: 102392.

    Published online 2021 Oct 4. doi: 10.1016/j.resourpol.2021.102392

    PMCID: PMC8507600 PMID: 34658485

    Impact of COVID-19 pandemic on crude oil prices: Evidence from Econophysics approach

    Cheima Gharib,a Salma Mefteh-Wali,b Vanessa Serret,c and Sami Ben Jabeurd,∗

    Author information Article notes Copyright and License information Disclaimer

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    Abstract

    This paper provides an analysis of crude oil, diesel, and gasoline prices for the period from November 1, 2019 to December 31, 2020. We apply Log Periodic Power-Law Singularity (LPPLS) and Discrete Scale LPPLS bubble indicators to explore the dynamic bubbles of oil prices and predict their crash times. The results indicate that West Texas Light crude oil and North Sea Brent crude oil experienced a statistically significant negative financial bubble during the COVID-19 outbreak. In addition, gasoline and diesel prices are mainly driven by fundamentals. Our findings are expected to be useful to oil market investors, policymakers, and energy experts.

    Keywords: Oil prices, LPPLS, Financial bubbles, Crashes, COVID-19

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    1. Introduction

    Since the 1970s, oil prices have experienced complex fluctuations. These fluctuations are mostly related to historical events such as the first and second Gulf War, and the global financial crisis of 2008. The last decade was marked by a collapse of the oil market in 2014/2015 followed a few years later by the pandemic that caused an unprecedented fall in prices. Recently, on Monday, April 21, 2020, the price of U.S. crude oil turned negative for the first time in history, forcing producers to pay buyers to take the barrels that they could not store due to the oversupply of oil. This situation is a direct result of failed negotiations between Russia and the Organization of the Petroleum Exporting Countries (OPEC) to reduce daily barrel production and the drop in oil demand due to the COVID-19 outbreak. Energy consumption in general, and oil demand in particular, have decreased as offices shut and industrial activity slowed sharply with government travel and work restrictions to slow the spread of the coronavirus.

    Despite the announced energy transition in many parts of the world, oil is one of the main sources of energy. Crude oil in particular is a major asset in the commodities market. The crude oil price has exhibited considerable fluctuations over the past decade (Perifanis and Dagoumas, 2019). In addition, the observed variations in oil prices have a significant impact on financial markets and the real economy of countries (Li et al., 2020). In this line, the debates surrounding the behavior of oil prices are of ongoing interest to academics, policymakers, and investors (Caspi et al., 2018). This interest is even more important when prices deviate from fundamental values and a price bubble phenomenon is observed. It is always important to question the detection of oil price bubbles; their underlying causes, and their lifetimes help inform financial authorities. Policy makers will then take care to prevent the formation of bubbles and to manage their eventual explosion through appropriate regulations.

    Much of the literature questions the rationality of investors due to observed deviations of prices from their fundamentals (Zhang and Yao, 2016). This research attributes this phenomenon to the increasing speculative behavior of financial agents, linked to the financialization of commodity markets. Other research explains the existence of bubbles by sudden variations in supply and demand (Kilian and Murphy, 2014). We enrich this field of literature by detecting bubble episodes in the oil market during the Covid-19 pandemic. More specifically, this study attempts to understand whether the oil market behaved efficiently and rationally during the pandemic, or whether the shock of declining demand was associated with a negative financial bubble?

    We contribute to the empirical literature related to oil price behavior in several ways. Firstly, we analyze the daily West Texas Light (WTI) and North Sea Brent (Brent) crude oil, diesel, and gasoline prices from November 1, 2019 to December 31, 2020. This studied period allows us not only to analyze the recent crash in the price of oil, but also to offer new, clarifying evidence for important previous shocks in oil prices, that of 2014–2015 for example, because this last decade was marked by an increase in the financialization of the markets. Furthermore, we explore the pricing behavior of two downstream products of crude oil, i.e., diesel and gasoline. Thus, we consider two reference prices of crude oil (United States, Europe) of the zones which were badly impacted by the pandemic. This makes it possible to assess whether the appearance of the bubble depends on where the oil is traded. In addition, we examine whether crude and refined products have similar movements. Secondly, we use multiple complementary techniques to test for financial bubbles. To begin with, we use the supremum augmented Dickey-Fuller (SADF) test, the generalized supremum augmented Dickey-Fuller (GSADF) test (Alola, 2020), and the explosive test strategy proposed by Phillips and Shi (2018) to focus on the detection and date stamping of mildly explosive periods. We also apply the LPPLS model for financial bubbles, an approach which was first developed by Sornette et al. (1999), Johansen et al. (1999), and Johansen et al. (1999). Then, we apply Sornette et al. (2015) DS LPPLS bubble indicators, i.e., the confidence and trust indicators, as effective warnings for identifying the negative bubble during the period of the COVID-19 outbreak.

    स्रोत : www.ncbi.nlm.nih.gov

    The impact of coronavirus (COVID

    The double blow of coronavirus (COVID-19) and the oil price shock is hitting oil-exporting developing countries particularly hard, at a time when the fossil fuel industry is facing a process of structural decline. Although some countries might weather the current crisis on the back of sovereign wealth funds or relatively low public debt levels, this will not be the case for the majority of fragile oil-exporting countries, many of which are resource dependent and were already grappling with high levels of debt and multifaceted economic and social fragility before the present crisis. Oil-exporting developing countries have experienced an increased reliance on short-term and expensive non-concessional private borrowing in recent years, a significant proportion of which is backed by oil collateral. Some countries may find themselves entering a spiral of unsustainable borrowing on the back of the current turmoil. A timely and coherent response is needed, encompassing both concessional lenders and private financiers, to create fiscal space, reduce the risks of unsustainable debt, corruption and illicit financial flows, and catalyse a transition to a cleaner and more sustainable future

    Abstract

    The double blow of Coronavirus (COVID-19) and the oil price shock is hitting oil-exporting developing countries particularly hard at a time when the fossil fuel industry is facing a process of structural decline. Although some countries might weather the current crisis on the back of sovereign wealth funds or relatively low public debt levels, this will not be the case for the majority of fragile oil-exporting countries, many of which are resource dependent and were already grappling with high levels of debt and multifaceted economic and social fragility before the present crisis. Some countries may find themselves entering a spiral of unsustainable borrowing on the back of the current turmoil, as oil-exporting developing countries have experienced an increased reliance on short-term and expensive non-concessional private borrowing in recent years, a significant proportion of which is backed by oil collateral. A timely and coherent response is needed, encompassing both concessional lenders and private financiers, to create fiscal space in oil-exporting developing countries, reduce the risks of unsustainable debt, corruption and illicit financial flows (IFFs), and catalyse a transition to a cleaner and more sustainable future.

    Fragile, oil-exporting developing countries will be hard hit by the consequences of the Coronavirus (COVID-19) pandemic, and the opportunity exists to assist these countries to transition towards a low-carbon, more diversified and resilient economic future

    Countries that are net exporters of oil are experiencing an unprecedented double blow; a global economic contraction driven by the COVID-19 pandemic and an oil market collapse with the benchmark price for United States crude oil, the West Texas Intermediate, briefly going negative for the first time in history (in April 2020). Based on an oil price of USD 30 per barrel, the International Energy Agency projects that oil and gas revenues for a number of key producers will fall by between 50 to 85% in 2020, compared with 2019, yet the losses could be larger depending on future market developments (IEA, 2020[1]). The present crisis is happening in the wider context of a structural decline in the market for fossil fuels, driven by a commitment towards decarbonisation by a number of countries as well as the wider technological changes that are gradually making renewable energies the preferred energy option (Lahn and Bradley, 2020[2]; Elgouacemi et al., 2020[3]).

    The current crisis is expected to hit oil-exporting developing countries particularly hard, for two reasons:

    First, the dependence of many of these countries on a single commodity for their exports and revenues renders them extremely vulnerable to market volatility. Although the largest share of commodity-dependent countries1 globally are in sub-Saharan Africa, oil and gas make up the majority share (over 60%) of total merchandise exports in a range of developing countries, including Algeria, Islamic Republic of Iran, Iraq, Libya, and Timor-Leste (UNCTAD, 2019[4]). In the period 2011-2013, the proceeds of crude oil sales by the top ten sub-Saharan Africa oil-exporting countries amounted to more than 50% of their combined government revenues and more than 75% of export earnings (Gillies, Guéniat and Kummer, 2014[5]). Indeed, UNCTAD reports that despite the global focus on energy transitions, and repeated calls to diversify their economies, some countries are more concentrated on commodities than ever (UNCTAD, 2020[6]). Other developing countries are still looking to expand their oil sectors as a source of future economic growth.

    Second, many of these countries were in vulnerable positions already before the current crisis, and further deterioration may exacerbate existing fragilities. Over half of low and lower middle-income countries dependent on oil and gas for their exports and revenues are classified as ‘fragile’.2 Decision makers in resource-rich countries have frequently struggled to translate resource wealth into poverty reduction and sustainable development, performing poorly across a number of development metrics, including on economic growth (Sachs and Warner, 1995[7]), democratic governance (Ross, 2012[8]), and conflict prevention (World Bank, 2011[9]). Although variation amongst countries exist, oil-exporting developing countries frequently score ‘weak’, ‘poor’, or ‘failing’ on metrics for good governance (NRGI, 2017[10]), with decision makers often having been found to overspend on consumption and wasteful infrastructure projects while neglecting priority sectors such as education and health (de la Croix and Delavallade, 2009[11]). The result is that social services in oil rich developing countries are often deficient and fail to cater to the most vulnerable populations. Although pockets of efficiency in the form of more capable and resourced state institutions often do exist in these countries, these institutions have tended to focus on the extraction of additional resources rather than on providing public goods that enhance the collective welfare (Hertog, 2010[12]; Soares de Oliveira, 2007[13]).

    In the context of these mounting pressures, opportunities exist for official development assistance (ODA) and particularly blended finance to be deployed to assist oil producing developing countries to transition towards a cleaner, more diversified and resilient future.

    With Coronavirus (COVID-19), an already volatile market has reached a flashpoint, accentuating the drawbacks of high dependence on non-renewable resources

    स्रोत : www.oecd.org

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