Examining the Role of Financial Examining the Role of

Examining the Role of Financial Examining the Role of

Examining the Role of Financial
Investors and Speculation
p
in Oil
Markets
Denis Babusiaux and Axel Pierru
Séminaire Académique
Economie de l’Energie 13-02-2013
Oil is a consumer good whose price, at economic
equilibrium is set where physical supply meets demand ...
equilibrium,
Oil stock, variable of adjustment between financial and economic equilibriums
1200000
Derivatives
markets in
equilibrium
1000000
Supply
Barrell price
800000
Futures price
Stock
Spot
price
600000
400000
Fundamental
price
200000
Physical market in
equilibrium
Demand
0
0,8
World consumption
1
1,2
1,4
1,6
1,8
Number of barrels
Oil storage, necessary signature of speculation
a continued - and not just temporary - increase in inventories for the price
of physical oil to remain above the level justified by market fundamentals.
Séminaire Académique
Economie de l’Energie 13-02-2013
2
Price elasticity of demand: a function of time horizon
Price elasticity in the short run: -5% (?),
(?) in the
long run -20% / -30% (?)
The demand curve plays a key role in the
standard economic analysis. However, the graphic
representation of a demand curve only makes sense if
we consider a given time horizon (corresponding to
the short run, for example).
And in the very short run?
Oil-demand g
gradually
y adjusting
j
g to a speculative
p
price :
p
price-elasticity is an increasing function of the time horizon considered.
Short- and long-run
g
elasticities can then be used to calibrate this function.
Séminaire Académique
Economie de l’Energie 13-02-2013
M
Merci
i de
d votre
t... attention
tt ti ....
Denis Babusiaux, Axel Pierru, Frédéric Lasserre, “Examining the Role of
Financial Investors and Speculation
p
in Oil Markets” Journal of
Alternative Investment, Vol. 14, N° 1, Summer 2011, 61- 74.
Denis Babusiaux, Frédéric Lasserre, Axel Pierru, “Marchés dérivés,
spéculation et prix du pétrole”, Revue de l’Energie, N° 597,
septembre-octobre 2010.
Séminaire Académique
Economie de l’Energie 13-02-2013