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Oil Prices and Stocks in the Second Quarter of 2004

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  • OPEC Secretariat

Abstract

Notwithstanding forecasting difficulties, the oil supply and demand balance has proved to be a good indicator of the state of the market and stock levels, which, in turn, influence price behaviour. In periods where OECD commercial stock levels lie within a certain range, currently around 2,450–2,650 million barrels, the range of prices is larger than when stock levels are very high or very low. In both the latter extreme situations, prices are prone to rapid movements, undermining market stability. Other factors, of course, also influence price fluctuations. The general opinion among regularly published oil market reports points to the inevitability of a higher‐than‐normal build in stocks in the second quarter of 2004. If the resulting surplus is not handled in a timely and effective manner, there is likely to be excessive downward pressure on prices, which, if left unattended, would lead to a protracted spell of volatility.

Suggested Citation

  • OPEC Secretariat, 2004. "Oil Prices and Stocks in the Second Quarter of 2004," OPEC Energy Review, Organization of the Petroleum Exporting Countries, vol. 28(1), pages 81-86, March.
    • Handle: RePEc:bla:opecrv:v:28:y:2004:i:1:p:81-86
    DOI: 10.1111/j.0277-0180.2004.00080.x
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    Cited by:

    1. Marco G.D. Guidi & Alexander Russell & Heather Tarbert, 2006. "The effect of OPEC policy decisions on oil and stock prices," OPEC Energy Review, Organization of the Petroleum Exporting Countries, vol. 30(1), pages 1-18, March.

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