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Oil Futures Dynamics and Energy Transition: Evidence from Macroeconomic and Energy Market Linkages

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  • Xiaomei Yuan

    (Business School, Xi’an Innovation College of Yan’an University, Xi’an 710100, China
    Shaanxi Rural Revitalization Institute, Xi’an Innovation College of Yan’an University, Xi’an 710100, China)

  • Fang-Rong Ren

    (College of Economics and Management, Nanjing Forestry University, Nanjing 210037, China)

  • Tao-Feng Wu

    (College of Economics and Management, Nanjing Forestry University, Nanjing 210037, China)

Abstract

Understanding the price dynamics of oil futures is crucial for advancing green finance strategies and supporting sustainable energy transitions. This study investigates the macroeconomic and energy market determinants of oil futures prices through Granger causality, cointegration analysis, and the error correction model, using daily data. It focuses on the influence of economic development levels, exchange rate fluctuations, and inter-energy price linkages. The empirical findings indicate that (1) oil futures prices exhibit strong correlations with other energy prices, macroeconomic factors, and exchange rate variables; (2) economic development significantly affects oil futures prices, while exchange rate impacts are statistically insignificant based on the daily data analyzed; (3) there exists a stable long-term equilibrium relationship between oil futures prices and variables representing economic activity, exchange rates, and energy market trends; (4) oil futures prices exhibit significant short-term dynamics while adjusting steadily toward a long-run equilibrium driven by macroeconomic and energy market fundamentals. By enhancing the accuracy of oil futures price forecasting, this study offers practical insights for managing financial risks associated with fossil energy markets and contributes to the formulation of low-carbon investment strategies. The findings provide a valuable reference for integrating energy pricing models into sustainable finance and climate-aligned portfolio decisions.

Suggested Citation

  • Xiaomei Yuan & Fang-Rong Ren & Tao-Feng Wu, 2025. "Oil Futures Dynamics and Energy Transition: Evidence from Macroeconomic and Energy Market Linkages," Energies, MDPI, vol. 18(14), pages 1-27, July.
    • Handle: RePEc:gam:jeners:v:18:y:2025:i:14:p:3889-:d:1706662
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