The Price Mechanism And The Price Trends In The Global Oil Market

Acting as an important strategic material for countries’ economic development and national security,oil characterizes scarce and non-renewable.Recent years,following with the rapid economic development,China’s crude oil imports have risen dramatically,reaching as high as nearly 200 million toe per year with an external dependence of more than 50%,ranking the second next to the United States.As the special status and importance of oil,competition and control for oil among countries have never ceased,greatly stimulating the volatility of oil prices,and impacting and damaging the oil demand countries,especially China.Under the background of high degree of global free trade,in addition to traditional political and military means,the financial instrument has become one of the important means for the world powers to control and interference the oil pricing mechanism.Oil market together with futures market,foreign exchange and money market and financial derivatives market have constituted a complex financial system,thus the financial property of the oil is being constantly strengthened,and has basically finished conversion from goods property to financial property.Futures market prices increasingly play a key role in the international oil pricing mechanism,and its annual oil trade volume of total global trade has accounted for about 85%.This makes the proportion of speculation in oil prices increase,pushing directly the oil price to a recording level of $147/bbl in 2007.Obviously,the real value of oil was deviated because of the speculation of financial capital,and has been harmful to the normal development of the world economy.Although the occurrence of the global financial crisis has dragged down oil consumption,bringing the oil prices into rational regression,but this does not necessarily mean that the oil will return to reasonable pricing mechanism after the crisis.Over the years,China has not the right to speak in the international oil pricing mechanism,often becoming the victims of high oil prices,seriously threatening energy security and health and stable economic development.Therefore,it has important theoretical and practical significances for further study of the formation mechanism of oil prices,the inherent law of oil price volatility,the factors of oil price volatility,the accurate judgments of future oil price movements,and to mitigating the impact on national economic development.This paper reviewed the major international oil trading methods and the theory of oil price formation,introduced the major international oil market pricing mechanism,and analyzed the relationship between the international oil futures market price and the spot market price.By means of relevant knowledge of resource economics,econometrics,macroeconomics,microeconomics,finance and other disciplines,influencing factors of oil prices were profoundly analyzed in the aspects of oil production,demand,production costs,financial capital,futures market,exchange rate,reserves and stocks,alternative energy and political economy.Through combination of empirical analysis and theoretical analysis,various factors on oil prices were systematically demonstrated.Based on the law of oil price changes,prediction model was constructed and predicted oil prices by using of time series analysis method.On the basis of the analysis and research,it was concluded that to the long term,China should endeavor to play influences in the international oil price system,and seek the right to speak for oil pricing,in order to establish a reasonable and perfect international oil market,and to increase the resilience and adaptability of China economy against the impact of international oil prices.The main conclusions in this paper are as follows:1.The gross long-term supply and demand of international oil market will be in equilibrium,but by the number of non-supply and demand factors,partial and short-term inequilibrium status will frequently appear,destroying healthy development of world oil market.2.The oil pricing mechanism has passed through four stages:by the Western monopoly before 1973,by the OPEC from 1973 to 1986,diversely pricing from 1986 to 2002,pricing by future market since 2003.3.The influencing factors of long-term changes of oil prices include supply and demand,costs,market system and development of alternative energies;that of short-term changes include speculation,monetary value,inventory,emergency,short-term supply and demand balance,but existing great variability.4.The global oil production peak will reach during 2025～2030.Before the advent of the peak,oil prices will stabilize in the range of $60～90/bbl;when reaching the peak,oil will be alternated by other kinds of energies in a large scale,and the global energy consumption structure will welcome a major adjustment,leading to the oil price changing greatly.