The Most Recent Oil Price Drop is Troubling FEATURED
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When we last focused on crude oil, in mid-November, we noted that the ongoing crude oil price decline was very likely due to reduced precautionary demand where traders were acting in anticipation of higher upcoming oil production. This type of oil price drop is distinct from those caused by actual increases in supply or to an overall reduction in aggregate demand, and has mostly benign implications including slightly higher growth and lower inflation. Furthermore, these types of price swings are oil-specific, usually do not impact non-energy commodities, and dissipate reasonably quickly, taking about 18 months for oil prices to revert halfway back to their trend value.
| File Name: | The Most Recent Oil Price Drop is Troubling (1).pdf |
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| Created Date: | 01-07-2019 |
| Last Updated Date: | 01-07-2019 |
| Document history: |
When we last focused on crude oil, in mid-November, we noted that the ongoing crude oil price decline was very likely due to reduced precautionary demand where traders were acting in anticipation of higher upcoming oil production. This type of oil price drop is distinct from those caused by actual increases in supply or to an overall reduction in aggregate demand, and has mostly benign implications including slightly higher growth and lower inflation. Furthermore, these types of price swings are oil-specific, usually do not impact non-energy commodities, and dissipate reasonably quickly, taking about 18 months for oil prices to revert halfway back to their trend value. |