Financial Factors That Affect Oil Prices

In recent years, frequent and severe fluctuations have been taking place in international oil market. Supply and demand factors cannot explain this unusual variation perfectly. In fact, the international oil market has become a highly complex and sophisticated financial market. It is necessary for us to analyze it from the financial perspect in order to explain the fluctuations and inspection of oil prices.Based on a variety of financial factors, this paper tries to build the framework of the theory of oil price volatility. The method in it is selecting the corresponding index and using VAR model for correlation analysis, ADF test, co-integration analysis, Granger causality test and other empirical test. The results show that:(1) USD exchange rate and commercial oil stock has granger causality influence on oil price. They interact and promote international oil prices change in recent years, which force the graph to perform away from the basic laws of supply and demand and show frequent and severe fluctuations in the trend;(2) non-commercial trading positions doesn’t accounted for crude oil futures prices by the analysis of granger causal test;(3)Through the co-integration equation we can see: which impacts rude oil futures price most is USD exchange rate, followed by the commercail oil stock, bearing the accounting information in oil speculation. Crude oil supply and non-commercial trading positions in future market has minimal impact.For empirical results, policy recommendations is given at the end of this paper,which are:(1) Promote international monetary system reform, stabilize the exchange rate;(2) Build oil stock system in our country for both strategic and commercial purpose.