Our oil price decomposition, reported biweekly, examines what’s behind recent fluctuations in oil prices: demand factors, supply factors, or some combination of the two?
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Oil Price Dynamics Report
November 28: Highlights
Oil prices fell over the past week owing to higher supply and lower demand.
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Over the past week, increases in supply expectations combined with lower demand led to a fall in oil prices. In 2022:Q3, oil prices fell as declining global demand reduced price pressure.
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In 2022:Q2, oil prices increased as decreased anticipated supply offset decreased demand expectations. In 2022:Q1, oil prices increased as decreased anticipated supply offset lower demand expectations. In 2021:Q4, oil prices decreased as increased anticipated supply outstripped the effect of an improving demand outlook. In 2021:Q3, oil prices rose owing to increased demand and decreased supply. Rising demand expectations were the main cause of higher oil prices in 2021:Q1 and 2021:Q2. In 2020:Q1, oil prices plummeted owing to decreased demand and increased supply, while in 2020:Q2, oil prices rose owing to increased demand. Increased supply led to falling oil prices in 2020:Q3. This reversed in 2020:Q4, as oil prices rose owing to increased demand and decreased supply.
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Overall, between 2014 and 2017, lower global demand expectations and higher anticipated supply held oil prices down. This trend has reversed since mid-2017, as stronger demand expectations and stabilizing anticipated supply drove prices higher. This lasted until 2018:Q4, when weaker demand lowered prices. Oil prices rose in 2019 due to increasing demand expectations.
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Released weekly on Mondays at 3 p.m. (Exceptions noted above.)
Note: To assist readers, the New York Fed is now publishing the data underlying the charts and tables. While the Bank does not share the code for its calculations, information about the methodology is available in the PDF report and the related reading noted on this page. The New York Fed does not offer individualized services to readers, such as custom charts or analysis.
Our analysis of oil price movements does not necessarily represent the views of the Federal Reserve Bank of New York, the Federal Reserve System, or the Federal Open Market Committee.
Related Reading
For more information about the methodology, see “Is Cheaper Oil Good News or Bad News for the U.S. Economy?” Liberty Street Economics, June 8, 2015.
We also updated our analysis in “Lower Oil Prices and U.S. Economic Activity” Liberty Street Economics, May 2, 2016.
How to cite this data:
Federal Reserve Bank of New York, Oil Price Dynamics Report, https://www.newyorkfed.org/research/policy/oil_price_dynamics_report.html.
Archive
How oil price fluctuations affect the U.S. economy will depend on whether supply or demand factors are driving them. Our statistical model examines correlations of oil price changes with a broad array of financial variables to determine which forces best explain price movements. We update it biweekly on Monday at 3 p.m. (except during blackout periods surrounding Federal Open Market Committee meetings). When federal holidays occur on a Monday, the report is delayed by twenty-four hours. Find detailed information about our methodology within the report.
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