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Regionalization in the World Crude Oil Market: Further Evidence

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  • S. Gürcan Gülen

Abstract

This paper extends the tests of Weiner's (1991) regionalization hypothesis in Gillen (1997), which employed monthly data, to weekly data from a more recent period (1991:4-1996:52). The higher frequency data allows us to analyze the co-movement of prices for similar quality crude oils from different regions of the world in shorter periods of time. In addition to the full sample, two subperiods (one of falling prices, 1991:4-93:52 and the other of rising prices, 1994:1 96:52) are analyzed. The results are usually similar to those from Gillen (1997) which rejected regionalization, but the comparison of the two subperiods leads to some interesting conclusions. First, prices (including that of Saudi Arabian Heavy) appear to be more in line with each other during tight market conditions than during weak market conditions. Second, the global benchmark role of WTI and UK Brent is reinforced.

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  • S. Gürcan Gülen, 1999. "Regionalization in the World Crude Oil Market: Further Evidence," The Energy Journal, , vol. 20(1), pages 125-139, January.
    • Handle: RePEc:sae:enejou:v:20:y:1999:i:1:p:125-139
    DOI: 10.5547/ISSN0195-6574-EJ-Vol20-No1-7
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    3. Perron, Pierre, 1989. "The Great Crash, the Oil Price Shock, and the Unit Root Hypothesis," Econometrica, Econometric Society, vol. 57(6), pages 1361-1401, November.
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