Study On The Fluctuation Of International Oil Price And China's Oil Pricing Mechanism

This study theoretically and empirically analyzes the influencing factors of oil price and evaluates weights of these factors. From theoretical view, many particularities in the oil pricing system are found comparing to the normal one basing on the characteristics of oil trading. Analyzing the oil pricing system in the view of supply and demand theory, game theory, theory of industrial organization and political economics can not only evaluate traditional influences of supply and demand which highly affect the oil price, but also discover the interferences from global finance market and international political circumstance. This structure is the foundation of theoretic analysis in this paper.From the empirically view, historical analysis and econometric model researches construct the empirical study in the paper. In the historical analysis, the study recalls the history of oil price fluctuation in 1960s and explains causes of the fluctuation. In the empirical analysis, the study uses Dynamic VAR model to go Cointegration Test, Granger Causality Test, Impulse Response Model Analysis. Results of these tests prove that there are long term and shout term formulas which describe the relationship between oil price and influencing factors. In the long term, the structure of supply and demand is the main influencing factor upon the oil price. The supply part is formed by the policies of OPEC, the oil production outside the OPEC, the emergencies happened in main oil-producing countries. The demand part contacts with the world economy, the production of coal and nature gas, the development of energy saving technologies and the popularity of the energy saving awareness. All the factors mentioned above work together to decide the long term trend of oil price. In the short term, because of the rigid supply and demand system the furious price fluctuation in recent years is caused by uncertainties in futures market and foreign exchange market and by some changes in demand part. Among these factors, the development of future market is the main reason that causing the oil price fluctuation. In the second, the undulation of the exchange rate especially U.S. dollar exchange rate is another important reason causing the fluctuation of oil price. At last, it is the world economy that affects the oil price.Based on the analysis above, this study suggests that our country should reinforce the influence of world crude and refined oil price, establish oil reserve system, consummate domestic future market and improve the legal and administrative system referring to the oil pricing, in order to reduce the bad impact from oil price fluctuation.