A Comparison of Oil Stock Impacts in US and other OECD countries on the OPEC Spot Oil Prices

Oil stocks in OECD countries have a significant impact on the global oil prices. In this article, a comparative analysis of the oil stock levels effects in US and other OECD countries on the OPEC spot oil prices is conducted. The paper uses the Granger- Johansen co-integration and VECM methodologies using monthly data for the period January 2003 to November 2014. the VAR-based Johansen co-integration tests results reveal the existence of one co-integrating equation and, hence, a long-term relationship in the model. According to VECM based Granger causality tests, there is a unilateral causality from OPEC spot prices toward US oil stock and WTI oil prices and also unilateral causality from other OECD countries stock to OPEC spot prices in the short run and long run. Based on IRFs, OPEC spot prices show an asymmetric reaction to an innovation in US and OECD stocks, implying that these shocks impose positive and negative impacts on the OPEC spot market, respectively. Finally, OECD stock inventories is a more powerful to explain OPEC spot prices than the US stock.