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How to 'Trump' the energy market: evidence from the WTI-Brent spread

Author

Listed:
  • Catalin Dragomirescu-Gaina

    (Unicatt - Università cattolica del Sacro Cuore [Milano])

  • Dionisis Philippas

    (ESSCA Research Lab - ESSCA - Ecole Supérieure des Sciences Commerciales d'Angers)

  • Stéphane Goutte

    (SOURCE - SOUtenabilité et RésilienCE - UVSQ - Université de Versailles Saint-Quentin-en-Yvelines - IRD [France-Nord] - Institut de Recherche pour le Développement)

Abstract

Donald Trump's use of Twitter was unprecedented. Despite his erratic communication style, some of Trump's strong statements were made in reference to the U.S. oil & gas industry, in line with his domestic policy agenda aimed at supporting re-industrialization and local investment. Did his Twitter messages actually reach domestic oil producers, refiners and transport operators or rather speculators willing to financially gamble on new information sources? To address this question, we model the WTI-Brent spread, which commonly reflects supply bottlenecks in the U.S. crude oil sector, using a nonlinear approach that reveals the perverse influence of some of Trump's tweets particularly on market speculative dynamics. Finally, we outline policy recommendations to counteract the market consequences of speculative behaviour driven by political noise.

Suggested Citation

  • Catalin Dragomirescu-Gaina & Dionisis Philippas & Stéphane Goutte, 2022. "How to 'Trump' the energy market: evidence from the WTI-Brent spread," Working Papers halshs-03843257, HAL.
    • Handle: RePEc:hal:wpaper:halshs-03843257
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-03843257
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    More about this item

    Keywords

    WTI-Brent spread; Twitter; speculation;
    All these keywords.

    JEL classification:

    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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