Over the past six months, crude oil prices have been especially volatile, although the general trend has been upward over this period. Over a two-year period, however, crude oil prices have also been vulnerable, although the London price for Brent crude 30-day futures in April 2003 ($24.08/b) was actually lower than it was in March 2001 ($25.84/b). Over this two-year period, expectations of changes in crude oil supply more so than expectations related to demand or actual supply and demand conditions appear to be the driver for volatility in crude oil prices (Schwartz, 2003; “World Oil Prices Carry $4.8/b War Premium”, 2002).

This research analyses the price behavior of crude oil prices. A primary focus of this analysis is on the nine-month period from September 2002 through April 2003. To fully understand the behavior of crude oil prices in this period, however, it is also necessary to consider crude oil price behavior for the 25-month period from March 2001 through April 2003.

In the analysis of crude oil price behavior, the primary focus is on Brent crude oil 30-day futures. Considered in the analysis also, however, is the price behavior of West Texas Intermediate crude oil 30-day futures, as West Texas Intermediate prices frequently influence Brent prices (Williams, 2003).

Table 1 (on the following page) presents data reflecting Brent crude oil 30-day futures price behavior and the West Texas Intermediate crude oil 30-day futures price behavior for the March 2001 to April 2003 period. Included in the table also are reasons to which various analysis attributed change in crude oil prices.

As the data presented in the table indicate, the price for West Texas Intermediate crude oil follows a pattern that generally is similar to that of Brent crude oil, although the price for West Texas Intermediate crude tends to be higher than that for Brent crude. The mean price for …

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