The fluctuation cycle of crude oil price trend
What is the volatility cycle of crude oil prices ? Compared with the confusing price fluctuations in the short-term crude oil market, the market may be more concerned about the medium-term trend of crude oil prices.
As the basic energy of economic development , the continuous fluctuation of crude oil price in the medium term may have a greater impact on economic growth. From the perspective of supply in the economy, the rise in oil prices will lead to an increase in production costs and a reduction in output, which in turn will lead to economic recession; from the perspective of demand in the economy, the continued rise in oil prices will lead to aggravation of inflation , the total social demand will decrease, and under the constraint of wage rigidity, the labor demand will also decrease, and the economy will be greatly affected. American economist James D. Hamilton’s research on the relationship between changes in crude oil prices and economic growth shows that excessive fluctuations in oil prices will disrupt the spending items of households and businesses, thus having a negative impact on economic growth.
Considering that the business cycle (also known as business cycle, business cycle, and prosperity cycle) is a phenomenon in which economic expansion and economic contraction occur alternately and cyclically in economic operation, on the one hand, it reflects the overall nature of the economy. The overall development trend is the result of the comprehensive action of various factors in the economy; on the other hand, it will form important influences and constraints on various specific aspects of the economy. As an important part of the commodity market, the international crude oil market will inevitably be affected and constrained by the economic cycle. When the economy enters a rising cycle, the demand for crude oil will gradually increase, and the consumption will continue to expand, and the price of crude oil will gradually rise; when the economy enters a recession cycle, the demand will be sluggish and consumption will slow down, and the price of crude oil will also decline. Therefore, although fluctuations in oil prices will impact economic growth on the one hand, the cycle of economic cycles will also constrain the crude oil market and affect the development trend of oil prices.
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