Modern Oil Market Financial Aspects

The article examines the trends in oil prices from the point of view of the functioning of adjacent financial markets. The main purpose of the study is to identify direct and inverse relationships between the processes of oil pricing in financial markets and the formation of sources of financing for operations in the capital market. The global financial market centered in the United States was chosen as the object of research. The subject of the research is financial and economic relations arising in the process of pricing in the oil market during the integration of this market into the global finance system. The hypothesis of the study was that oil prices are determined not so much by the ratio of supply and demand for physical oil, as by changes in adjacent financial markets.

To achieve the goal and confirm or refute the hypothesis, multiple regression analysis was carried out, which made it possible to confirm the presence of a strong relationship between oil prices and the dynamics of the stock market, money market and commodity market. The mechanism for the transmission of price impulses is seen in the process of liquidity management and in the mechanisms for funding capital transactions at the expense of money market instruments. Since petrodollars are one of the sources of liquidity in the European market, liquidity is provided by balancing oil prices and rates in this market. Further, the impulse is transmitted to the capital market, and from it – to the commodity markets. Thus, the mechanism of financial intermediation between market segments determines the systems of complex relationships in the formation of oil prices. The practical conclusion from the analysis should be that the analysis of supply and demand in the physical oil markets without taking into account the financial characteristics of the modern concentrated capital market and sources of liquidity on it will not allow avoiding serious errors in forecast estimates.

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