Crude oil price fluctuation has been a major issue for companies, governments and economies around the world. It can be a burden for households with higher gas prices and utility bills, or an opportunity for businesses to lower operating costs and stimulate economic growth. Moreover, rapid fluctuations in crude oil prices can have outsize impacts on global geopolitics. The volatility of oil prices is caused by many factors, including changes in supply and demand, production, and events such as political tensions, war, financial crisis, and technological breakthroughs.
The rapid development of the commodity market and derivatives market have made the formation mechanism of oil price fluctuation more complex. The source of crude oil price fluctuation is mainly divided into two parts: commodity attribute and financial attribute. The influence effect of the financial market on the price of crude oil is much stronger than that of the commodity attributes. Since the 1970s, oil demand shocks have played a crucial role in the rise of oil prices. But in recent years, the impact of the financial fluctuation source on the price of crude oil has been strengthened and gradually occupied the dominant position.
The main objective of this article is to extract the structure of WTI crude oil price fluctuation from the perspective of the influence mechanism. Then, the dynamic characteristics, asymmetries, and event impact of the various sources of fluctuation are analyzed. The influence process of different sources of crude oil price fluctuation is also compared and analyzed.
About the Author
