Crude Oil and Gasoline Price Monitoring
What drives crude oil prices? An analysis of 7 factors that influence oil markets, with chart data updated monthly and quarterly
December 08, 2015 | Washington, DC
U.S. Energy Information Administration
Independent Statistics & Analysis
www.eia.gov
Crude oil prices react to a variety of geopolitical and economic events price per barrel (real 2010 dollars) 150 Global financial collapse
125 Iran-Iraq War
100
75
Low spare capacity U.S. spare capacity exhausted
9-11 attacks Saudis abandon swing producer role Asian financial crisis
50
25
OPEC cuts targets 4.2 mmbpd
Iranian revolution Arab Oil Embargo
0 1970
1975
1980
OPEC cuts targets 1.7 mmbpd
Iraq invades Kuwait
1985
1990
1995
imported refiner acquisition cost of crude oil
2000
2005
2010
2015
WTI crude oil price
Sources: U.S. Energy Information Administration, Thomson Reuters
December 08, 2015
2
World oil prices move together due to arbitrage $/bbl (real 2010 dollars, monthly average) 160 140 120 100 80 60 40 20 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
WTI
Brent
Mars
Tapis
Dubai
Sources: Bloomberg, Thomson Reuters
December 08, 2015
3
Crude oil prices are the primary driver of petroleum product prices
Sources: EIA Short Term Energy Outlook, Thomson Reuters
December 08, 2015
4
Economic growth has a strong impact on oil consumption
Sources: U.S. Energy Information Administration, IHS Global Insight
December 08, 2015
5
Changes in expectations of economic growth in can affect oil prices percent GDP growth in non-OECD countries (annual expectations) 8
6
4
2
0 Jan '12
Jul '12
forecast year:
Jan '13
2012
Jul '13
2013
Jan '14
2014
Jul '14
2015
Jan '15
Jul '15
2016
Note: Starting in January of each year, each line shows the expected forecast of GDP growth for the specified calendar year, which tends to move toward the actual realized growth outcome as the year progresses. Expectations continue to evolve into the next calendar year as revised GDP data become available (e.g., 2008 GDP expectations are revised even during 2009).
Source: IHS Global Insight
December 08, 2015
6
In OECD countries, price increases have coincided with lower consumption percent change (year-on-year)
price per barrel (real 2010 dollars)
6
150
4
100
2
50
0
0
-2
-4
-6 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
OECD liquid fuels consumption
WTI crude oil price
Sources: EIA Short Term Energy Outlook, Thomson Reuters
December 08, 2015
7
Rising oil prices held down global oil consumption growth from 2005-2008, despite high economic growth
Sources: EIA Short Term Energy Outlook, Thomson Reuters
December 08, 2015
8
Changes in non-OPEC production can affect oil prices
Sources: EIA Short Term Energy Outlook, Thomson Reuters
December 08, 2015
9
Non-OPEC supply expectations indicate changes in market sentiment concerning oil supply million barrels per day (annual expectations) 59.0 58.5 58.0 57.5 57.0 56.5 56.0 55.5 55.0 54.5 54.0 53.5 53.0 52.5 52.0 51.5 51.0
Note: Starting in January of each year, each line shows the expected forecast of non-OPEC supply for the specified calendar year, which tends to move toward the actual realized supply
outcome as the year progresses.
2011
2012
forecast year:
2013
2012
2013
2014
2014
2015
2015
2016
Sources: EIA Short Term Energy Outlook
December 08, 2015
10
Changes in Saudi Arabia crude oil production can affect oil prices million barrels per day (year-on-year)
percent change (year-on-year)
2.5
100
2
80
1.5
60
1
40
0.5
20
0
0
-0.5
-20
-1
-40
-1.5
-60 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Saudi Arabia crude oil production
WTI percent change
Sources: U.S. Energy Information Administration, Thomson Reuters
December 08, 2015
11
Unplanned supply disruptions tighten world oil markets and push prices higher million barrels per day 4
3
2
1
0 Jan '11
Jul '11
Jan '12
Jul '12
Jan '13
OPEC supply disruptions
Jul '13
Jan '14
Jul '14
Jan '15
Jul '15
non-OPEC supply disruptions
Sources: U.S. Energy Information Administration
December 08, 2015
12
During 2003-2008, OPEC’s spare production levels were low, limiting its ability to respond to demand and price increases
Sources: EIA Short Term Energy Outlook, Thomson Reuters
December 08, 2015
13
The years 2003-2008 experienced periods of very strong economic and oil demand growth, slow supply growth and tight spare capacity
Sources: EIA Short Term Energy Outlook, Thomson Reuters
December 08, 2015
14
Inventory builds go hand-in-hand with increases in future oil prices relative to current prices (and vice versa) million barrels change (year-on-year)
$/bbl change (year-on-year)
250
25
200
20
150
15
100
10
50
5
0
0
-50
-5
-100
-10
-150
-15
-200
-20 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
OECD liquid fuels inventory
WTI crude 12th - 1st futures price spread
Sources: EIA Short Term Energy Outlook, Thomson Reuters
December 08, 2015
15
Open interest in crude oil futures grew over the last decade as more participants entered the market number of contracts (thousands) 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Source: Bloomberg
December 08, 2015
16
Physical participants’ (producers, merchants, processors, and end users) U.S. futures market contract positions number of contracts (thousands) 500 400 300 200 100 0 -100 -200 -300 -400 -500 -600 2008
2009
2010
producers/merchants long
2011
2012
2013
producers/merchants short
2014
2015
producers/merchants net
Source: CFTC Commitment of Traders
December 08, 2015
17
Money managers tend to be net long in the U.S. oil futures market number of contracts (thousands) 400 350 300 250 200 150 100 50 0 -50 -100 -150 -200 2008
2009
2010
money managers long
2011
2012
2013
money managers short
2014
2015
money managers net
Source: CFTC Commitment of Traders
December 08, 2015
18
Crude oil plays a major role in commodity investment 2015 Target Weights of the Bloomberg Commodity Index Lean Hogs: 1.9 %
Crude Oil: WTI: 7.8 %
Live Cattle: 3.3 % Nickel: 2.1 %
Crude Oil: Brent: 7.2 %
Zinc: 2.4 % Silver: 4.3 % Aluminum: 4.6 % Natural Gas: 8.7 % Copper: 7.5 %
Heating Oil: 3.8 %
Gasoline: 3.7 % Gold: 11.9 % Cotton: 1.5 %
Corn: 7.2 %
Coffee: 2.2 % Soy Meal: 2.7 % Soybeans: 5.7 %
Soybean Oil: 2.8 % Sugar: 4.0 %
Wheat: 4.5 %
Source: Bloomberg
December 08, 2015
19
Commodity index investment flows have tended to move together with commodity prices percent change (year-on-year) 200 150 100 50 0 -50 -100 2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Bloomberg Commodity Index assets under management (5 largest public U.S. commodity index funds) commodity index assets under management reported to CFTC under "special call"
Source: Bloomberg, Commodity Futures Trading Commission (CFTC)
December 08, 2015
20
Correlations (+ or -) between daily price changes of crude oil futures and other commodities generally rose in recent years
Date
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Natural Gas 0 0 0 1 0 1 0 0 0 1 1 1 0 0 0 0 0 0 0 0 1 1 0 0 0 0 0 0 0 0 # 0 0 0 0 0 0 0 0 0 0 # 0 0 0
2015
000 0
0 0# 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 1 1 1 0 0 0 0 1 0 1# 0 1 1 1 0 1 0 0 0 0 0 0 0 0#
0 0
Copper
# 0# 0 0 0 0 0# 0 0# 0 1 0 0 0 0 0 0 1 0 1 1 0 1 1 1 1 1 0 1 0 1 1 1 1 1 1 0 0 1 0 0 0
0 100 0
Silver
0 0# 0 0 0 0# 0 0 0 0 0 1 0 0 0 0 0 1 1 1 0 0 0 0 1 1 1 0 0 0 0 1 0 1 0 0 0 0 0 0 0 0#
0 000 0
Soy
# 0# 0# 0# 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 1 1 0 1 0 0 0 0 0 0 0 0 1 0 0 0 0 0# 0 0# 0
000 0
Corn
# 0## 0 0 0# 0 0 0 0 0 0 0 0 0# 0 0 1 0 0 1 1 0 0 1 0 0# 0 0 0 0 0 0 0 0 0# 0# 0 0
000 0
Wheat
0 0# 0 0 0 0# 0 0 0 0# 0 0 0 1## 0 0 0 0 0 1 1 0 1 0 0 0 0 0 0 0 0 0 0 0##### 0
Gold
0
0 0
00 0
< -0.65 -0.65 to -0.4 -0.4 to -0.25 -0.25 to 0.25 0.25 to 0.4 0.4 to 0.65 > 0.65 Negative correlation Positive correlation Note: Correlations computed quarterly
December 08, 2015
21
Correlations (+ or -) between daily returns on crude oil futures and financial investments have also strengthened Date
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
S & P 500
#### 0 0### 0# 0 0 0# 0 0 0 0# 0# 0 0 0 1 1 0 1 1 1 1# 1 1 1 0 1 1 0 0 1 0 0 0 0 0 0 0 0 0
U.S. Dollar
# # # # # # # # # # # # # # # 0 # # 0 # # # # # # # # # # # # # # # # # # # # # # # 0 # # # -0 # -0 # 0
U.S. Bonds
0 0 0 0 # 0 0 0 # 0 0 # 0 0 # # # 0 # 0 # 0 # # # # # # # # # # # # # # # # # # # # # 0 # # 0 # -0 # #
WTI Implied Volatility 0 # # 0 # 0 0 # 0 0 0 # 0 # 0 # # # # 0 0 0 # # # # # # # # # # 0 # # # # # # # # # 0 # # 0 -1 # -1 # # Inflation Expectations 0 0 0 # 0 0 0 0 0 0 0 0 1 1 0 0 0 0 0 0 1 0 1 # 0 0 0 0 0 1 0 0 0 1 1 0 0 1 0 0 # 1 0 0 0 0 0 0 0 1 1
< -0.65 -0.65 to -0.4 -0.4 to -0.25 -0.25 to 0.25 0.25 to 0.4 0.4 to 0.65 > 0.65 Negative correlation Positive correlation Note: Correlations computed quarterly
December 08, 2015
22
For more information U.S. Energy Information Administration home page | www.eia.gov
Short-Term Energy Outlook | www.eia.gov/steo Annual Energy Outlook | www.eia.gov/aeo International Energy Outlook | www.eia.gov/ieo Monthly Energy Review | www.eia.gov/mer
EIA Information Center (202) 586-8800 | email: [email protected]
December 08, 2015
23
December 08, 2015 | Washington, DC
U.S. Energy Information Administration
Independent Statistics & Analysis
www.eia.gov
Crude oil prices react to a variety of geopolitical and economic events price per barrel (real 2010 dollars) 150 Global financial collapse
125 Iran-Iraq War
100
75
Low spare capacity U.S. spare capacity exhausted
9-11 attacks Saudis abandon swing producer role Asian financial crisis
50
25
OPEC cuts targets 4.2 mmbpd
Iranian revolution Arab Oil Embargo
0 1970
1975
1980
OPEC cuts targets 1.7 mmbpd
Iraq invades Kuwait
1985
1990
1995
imported refiner acquisition cost of crude oil
2000
2005
2010
2015
WTI crude oil price
Sources: U.S. Energy Information Administration, Thomson Reuters
December 08, 2015
2
World oil prices move together due to arbitrage $/bbl (real 2010 dollars, monthly average) 160 140 120 100 80 60 40 20 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
WTI
Brent
Mars
Tapis
Dubai
Sources: Bloomberg, Thomson Reuters
December 08, 2015
3
Crude oil prices are the primary driver of petroleum product prices
Sources: EIA Short Term Energy Outlook, Thomson Reuters
December 08, 2015
4
Economic growth has a strong impact on oil consumption
Sources: U.S. Energy Information Administration, IHS Global Insight
December 08, 2015
5
Changes in expectations of economic growth in can affect oil prices percent GDP growth in non-OECD countries (annual expectations) 8
6
4
2
0 Jan '12
Jul '12
forecast year:
Jan '13
2012
Jul '13
2013
Jan '14
2014
Jul '14
2015
Jan '15
Jul '15
2016
Note: Starting in January of each year, each line shows the expected forecast of GDP growth for the specified calendar year, which tends to move toward the actual realized growth outcome as the year progresses. Expectations continue to evolve into the next calendar year as revised GDP data become available (e.g., 2008 GDP expectations are revised even during 2009).
Source: IHS Global Insight
December 08, 2015
6
In OECD countries, price increases have coincided with lower consumption percent change (year-on-year)
price per barrel (real 2010 dollars)
6
150
4
100
2
50
0
0
-2
-4
-6 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
OECD liquid fuels consumption
WTI crude oil price
Sources: EIA Short Term Energy Outlook, Thomson Reuters
December 08, 2015
7
Rising oil prices held down global oil consumption growth from 2005-2008, despite high economic growth
Sources: EIA Short Term Energy Outlook, Thomson Reuters
December 08, 2015
8
Changes in non-OPEC production can affect oil prices
Sources: EIA Short Term Energy Outlook, Thomson Reuters
December 08, 2015
9
Non-OPEC supply expectations indicate changes in market sentiment concerning oil supply million barrels per day (annual expectations) 59.0 58.5 58.0 57.5 57.0 56.5 56.0 55.5 55.0 54.5 54.0 53.5 53.0 52.5 52.0 51.5 51.0
Note: Starting in January of each year, each line shows the expected forecast of non-OPEC supply for the specified calendar year, which tends to move toward the actual realized supply
outcome as the year progresses.
2011
2012
forecast year:
2013
2012
2013
2014
2014
2015
2015
2016
Sources: EIA Short Term Energy Outlook
December 08, 2015
10
Changes in Saudi Arabia crude oil production can affect oil prices million barrels per day (year-on-year)
percent change (year-on-year)
2.5
100
2
80
1.5
60
1
40
0.5
20
0
0
-0.5
-20
-1
-40
-1.5
-60 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Saudi Arabia crude oil production
WTI percent change
Sources: U.S. Energy Information Administration, Thomson Reuters
December 08, 2015
11
Unplanned supply disruptions tighten world oil markets and push prices higher million barrels per day 4
3
2
1
0 Jan '11
Jul '11
Jan '12
Jul '12
Jan '13
OPEC supply disruptions
Jul '13
Jan '14
Jul '14
Jan '15
Jul '15
non-OPEC supply disruptions
Sources: U.S. Energy Information Administration
December 08, 2015
12
During 2003-2008, OPEC’s spare production levels were low, limiting its ability to respond to demand and price increases
Sources: EIA Short Term Energy Outlook, Thomson Reuters
December 08, 2015
13
The years 2003-2008 experienced periods of very strong economic and oil demand growth, slow supply growth and tight spare capacity
Sources: EIA Short Term Energy Outlook, Thomson Reuters
December 08, 2015
14
Inventory builds go hand-in-hand with increases in future oil prices relative to current prices (and vice versa) million barrels change (year-on-year)
$/bbl change (year-on-year)
250
25
200
20
150
15
100
10
50
5
0
0
-50
-5
-100
-10
-150
-15
-200
-20 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
OECD liquid fuels inventory
WTI crude 12th - 1st futures price spread
Sources: EIA Short Term Energy Outlook, Thomson Reuters
December 08, 2015
15
Open interest in crude oil futures grew over the last decade as more participants entered the market number of contracts (thousands) 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Source: Bloomberg
December 08, 2015
16
Physical participants’ (producers, merchants, processors, and end users) U.S. futures market contract positions number of contracts (thousands) 500 400 300 200 100 0 -100 -200 -300 -400 -500 -600 2008
2009
2010
producers/merchants long
2011
2012
2013
producers/merchants short
2014
2015
producers/merchants net
Source: CFTC Commitment of Traders
December 08, 2015
17
Money managers tend to be net long in the U.S. oil futures market number of contracts (thousands) 400 350 300 250 200 150 100 50 0 -50 -100 -150 -200 2008
2009
2010
money managers long
2011
2012
2013
money managers short
2014
2015
money managers net
Source: CFTC Commitment of Traders
December 08, 2015
18
Crude oil plays a major role in commodity investment 2015 Target Weights of the Bloomberg Commodity Index Lean Hogs: 1.9 %
Crude Oil: WTI: 7.8 %
Live Cattle: 3.3 % Nickel: 2.1 %
Crude Oil: Brent: 7.2 %
Zinc: 2.4 % Silver: 4.3 % Aluminum: 4.6 % Natural Gas: 8.7 % Copper: 7.5 %
Heating Oil: 3.8 %
Gasoline: 3.7 % Gold: 11.9 % Cotton: 1.5 %
Corn: 7.2 %
Coffee: 2.2 % Soy Meal: 2.7 % Soybeans: 5.7 %
Soybean Oil: 2.8 % Sugar: 4.0 %
Wheat: 4.5 %
Source: Bloomberg
December 08, 2015
19
Commodity index investment flows have tended to move together with commodity prices percent change (year-on-year) 200 150 100 50 0 -50 -100 2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Bloomberg Commodity Index assets under management (5 largest public U.S. commodity index funds) commodity index assets under management reported to CFTC under "special call"
Source: Bloomberg, Commodity Futures Trading Commission (CFTC)
December 08, 2015
20
Correlations (+ or -) between daily price changes of crude oil futures and other commodities generally rose in recent years
Date
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Natural Gas 0 0 0 1 0 1 0 0 0 1 1 1 0 0 0 0 0 0 0 0 1 1 0 0 0 0 0 0 0 0 # 0 0 0 0 0 0 0 0 0 0 # 0 0 0
2015
000 0
0 0# 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 1 1 1 0 0 0 0 1 0 1# 0 1 1 1 0 1 0 0 0 0 0 0 0 0#
0 0
Copper
# 0# 0 0 0 0 0# 0 0# 0 1 0 0 0 0 0 0 1 0 1 1 0 1 1 1 1 1 0 1 0 1 1 1 1 1 1 0 0 1 0 0 0
0 100 0
Silver
0 0# 0 0 0 0# 0 0 0 0 0 1 0 0 0 0 0 1 1 1 0 0 0 0 1 1 1 0 0 0 0 1 0 1 0 0 0 0 0 0 0 0#
0 000 0
Soy
# 0# 0# 0# 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 1 1 0 1 0 0 0 0 0 0 0 0 1 0 0 0 0 0# 0 0# 0
000 0
Corn
# 0## 0 0 0# 0 0 0 0 0 0 0 0 0# 0 0 1 0 0 1 1 0 0 1 0 0# 0 0 0 0 0 0 0 0 0# 0# 0 0
000 0
Wheat
0 0# 0 0 0 0# 0 0 0 0# 0 0 0 1## 0 0 0 0 0 1 1 0 1 0 0 0 0 0 0 0 0 0 0 0##### 0
Gold
0
0 0
00 0
< -0.65 -0.65 to -0.4 -0.4 to -0.25 -0.25 to 0.25 0.25 to 0.4 0.4 to 0.65 > 0.65 Negative correlation Positive correlation Note: Correlations computed quarterly
December 08, 2015
21
Correlations (+ or -) between daily returns on crude oil futures and financial investments have also strengthened Date
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
S & P 500
#### 0 0### 0# 0 0 0# 0 0 0 0# 0# 0 0 0 1 1 0 1 1 1 1# 1 1 1 0 1 1 0 0 1 0 0 0 0 0 0 0 0 0
U.S. Dollar
# # # # # # # # # # # # # # # 0 # # 0 # # # # # # # # # # # # # # # # # # # # # # # 0 # # # -0 # -0 # 0
U.S. Bonds
0 0 0 0 # 0 0 0 # 0 0 # 0 0 # # # 0 # 0 # 0 # # # # # # # # # # # # # # # # # # # # # 0 # # 0 # -0 # #
WTI Implied Volatility 0 # # 0 # 0 0 # 0 0 0 # 0 # 0 # # # # 0 0 0 # # # # # # # # # # 0 # # # # # # # # # 0 # # 0 -1 # -1 # # Inflation Expectations 0 0 0 # 0 0 0 0 0 0 0 0 1 1 0 0 0 0 0 0 1 0 1 # 0 0 0 0 0 1 0 0 0 1 1 0 0 1 0 0 # 1 0 0 0 0 0 0 0 1 1
< -0.65 -0.65 to -0.4 -0.4 to -0.25 -0.25 to 0.25 0.25 to 0.4 0.4 to 0.65 > 0.65 Negative correlation Positive correlation Note: Correlations computed quarterly
December 08, 2015
22
For more information U.S. Energy Information Administration home page | www.eia.gov
Short-Term Energy Outlook | www.eia.gov/steo Annual Energy Outlook | www.eia.gov/aeo International Energy Outlook | www.eia.gov/ieo Monthly Energy Review | www.eia.gov/mer
EIA Information Center (202) 586-8800 | email: [email protected]
December 08, 2015
23
