DP14580 Energy Markets and Global Economic Conditions

Author(s): Christiane Baumeister, Dimitris Korobilis, Thomas K. Lee
Publication Date: April 2020
Keyword(s): Energy demand, Forecasting, oil price pressures, petroleum consumption, state of the world economy, stochastic volatility
JEL(s): C11, C32, C52, Q41, Q47
Programme Areas: International Macroeconomics and Finance, Monetary Economics and Fluctuations
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=14580

This paper evaluates alternative indicators of global economic activity and other market fundamentals in terms of their usefulness for forecasting real oil prices and global petroleum consumption. We find that world industrial production is one of the most useful indicators that has been proposed in the literature. However, by combining measures from a number of different sources we can do even better. Our analysis results in a new index of global economic conditions and new measures for assessing future tightness of energy demand and expected oil price pressures.