Oil in the age of coronavirus: Hysteria or appropriate fall?

We look at the oil price fall in the beginning of 2020 and the effects of coronavirus and the attention towards it on these prices. Such a fall was observed at multiple markets simultaneously with the spread of coronavirus and the panic around it, and oil market wasn’t an exception. Using OLS time series models, we investigate — what was the main reason behind such a fall — the coronavirus pandemic itself or rather the attention towards it. We prove the absence of straight effects of the COVID-19 itself on oil prices. At the same time we find significant negative impact of the attention towards COVID-19 on the Internet search on the oil prices. We investigate the role of the OPEC in mitigating the negative impact of coronavirus and the attention towards it. We found that after the OPEC summit both the number of Covid cases and the attention towards the disease lost its influence on oil prices. Our paper is relevant for the behavioral finance researchers, as well as for those who look at the influence of informational shocks on different markets and particularly, on the oil market and at the effect of the COVID-19 on the economy.

Keywords

oil prices, COVID-19, hysteria, panic, Google, OPEC

Acknowledgment

We thank the RFBR for financial support in the scientific project No. 20-04-60158. We would like to thank O. Okhrin, I. Okhrin and Z. Juraeva for their valuable comments. We would also like to thank the participants of the April XXII HSE Conference (2021), the IV Russian Economic Congress (2020), the 43rd and 44th meetings of the Shatalin School Seminar (2020, 2021) and the Oil Market Prospects and Financial Stability Conference (2021) for their criticism, comments and suggestions. We also express our gratitude to the reviewer for the recommendations made, the time and labor spent on our article.

Received

16.03.2023

Publication date

29.03.2023

Number of characters

38819

Cite

GOST	Nepp A., Zykov A., Egorova Y. Oil in the age of coronavirus: Hysteria or appropriate fall? // Ekonomika i matematicheskie metody – 2023. – V. 59. – No. 1 C. 48-64 [Electronic resource]. URL: https://emm.jes.su/S042473880024876-2-1 (circulation date: 20.04.2024). DOI: 10.31857/S042473880024876-2
MLA	Nepp, Aleksandr, Zykov, Aleksander, Egorova, Yulia "Oil in the age of coronavirus: Hysteria or appropriate fall?." Ekonomika i matematicheskie metody 59.1 (2023):48-64. DOI: 10.31857/S042473880024876-2
APA	Nepp A., Zykov A., Egorova Y. (2023). Oil in the age of coronavirus: Hysteria or appropriate fall?. Ekonomika i matematicheskie metody 59(1), pp.48-64 DOI: 10.31857/S042473880024876-2

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