Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
994649 | Energy Policy | 2006 | 8 Pages |
Abstract
Since inventories have a lower bound or a minimum operating level, economic literature suggests a nonlinear relationship between inventory level and commodity prices. This was found to be the case in the short-run crude oil market. In order to explore this inventory–price relationship, two nonlinear inventory variables are defined and derived from the monthly normal level and relative level of OECD crude oil inventories from post 1991 Gulf War to October 2003: one for the low inventory state and another for the high inventory state of the crude oil market. Incorporation of low- and high-inventory variables in a single equation model to forecast short-run WTI crude oil prices enhances the model fit and forecast ability.
Related Topics
Physical Sciences and Engineering
Energy
Energy Engineering and Power Technology
Authors
Michael Ye, John Zyren, Joanne Shore,