Economics and Business
Referential and Reviewed International ScientificAnalytical Journal of Ivane Javakhishvili Tbilisi State University, Faculty of Economics and Business 


Journal number 2 ∘ Avtandil Silagadze ∘ Alexander Tvalchrelidze ∘ COVID19 Coronavirus Pandemic Influence on Crude Oil Prices A Preliminary Statistical Analysis World economy rapidly recovered after the 2009 global economic crisis, and starting from 2010 fast increase of the world GDP was fixed. In 2018 the world GDP was as high as US$ 85,909.816 billion [1]. The world economic growth was unexpectedly hampered by COVID19 coronavirus pandemic. Within one month the world economy has frozen, industries and budgetary incomes fall down to a critical level, employment collapsed, investor activities distorted and so on. Future prospects are vague. The current framework brings back to memory the period of the Great Depression, when the liberal economic doctrines failed, and governmental interventions became necessary [2]. It is obvious that after the pandemic breakthrough, a lot of fundamental principles will change in the world, including social & economic development doctrines: a bet seems to be placed on maximal involvement of national resources, and such a policy will both be basement of national economic strategies [37] and a precondition of regional economic relations [8]. Of course, there is a node of huge and crucial problems to be studied, but in this article, we will present a preliminary statistical analysis of crude oil prices within the framework of COVID19 coronavirus pandemic. Keywords: Pandemy, oil price, correlation coefficient, quadratic regression equation, statistical model. JEL Codes: C10, C40, H12 There is a huge number of publications in the world mass media where influence of coronavirus pandemic on crude oil prices is discussed, however, we have found only a single scientific article, where an econometric model of such an influence is explored [9]. The author concludes that pandemic influence is minor, and oil price trend follows its immanent regularities. However, in March 2020 available statistical material was minor, and econometric equations’ coefficients were not correctly proven. Even now, at our opinion, time for correct econometric analysis has not came yet. Only after cancelling the pandemic sanctions and dully registration of new infection cases such an analysis will have a scientific value. In a lot of publicist articles [see, for instance, 10] dramatic decrease of oil prices in spring 2020 is explained by decline of demand on fuel due to pandemic sanctions, which have canceled almost all international flights and theatrically diminished automobile traffic in the great majority of developed countries. Hence, as it was proven in a number of fundamental researches [11, 12, etc.], crude oil prices do not follow the main rule of economy and do not obey to supply vs demand ratio. As it has been explored earlier [13], oil prices are driven by the world commodity futures markets. For instance, in 2018 at the world stock, mercantile and commodity exchanges 30.28 billion futures, options and derivative contracts were signed [14], and 30.68% of them or 9.29 billion were oil contracts. Their total nominal cost exceeded three times the world oil consumption. That is why we have processed available by May 4, 2020 data. Information on world coronavirus infection rate were borrowed from the Worldometers data base [15], and on crude oil weekly prices – from U.S. Statistics Agency [16]. Average weighted weekly world crude oil prices were calculated as a mean value between the OPEC Basket, Brent Blend and Western Texas Intermediate (WTI) benchmark oil prices. World coronavirus infection cases were recalculated on the weekly basis. Fig. 1 demonstrates correlation between world oil prices and world coronavirus infection cases weekly. Extremely high negative value of the correlation coefficient r (critical value of Pearson’s correlation for 0.001equals 0.693 [17]) allowed us to perform statistical modelling of interdependence between weekly world coronavirus infection cases and crude oil price according to the methodology elaborated [5] and updated [18] earlier. Modelling was performed in the SPSS computer software using ANOVA (Analysis of Variance) technology [19]. Interrelation Between Weekly World Coronavirus Infection Cases and Average Weighted Crude Oil Price. Fig. 1.
Fig. 2 displays the quadratic equation of this interdependence whereas Tables 1 and 2 provide basic parameters and coefficients of the quadratic regression equation. Comparison of the real and the model (calculated as a function of weekly world coronavirus infection cases) crude oil price graphs are provided on Fig. 3. Tables demonstrate an admissible confidence value of the equation, proven also by good coincidence of the real and model oil price curves. Basic Parameters of the Equation Table 1
Coefficients of the Equation Table 2 The performed analysis leads to some principal and important conclusions as follows:
Will amount of weekly infected people diminish, crude oil futures contract prices will grow. Quadratic Model of Interdependence Between Weekly World Coronavirus Infection Cases and Crude Oil Price Fig. 2
Real and Model Crude Oil Prices in JanuaryApril 2020 Fig. 3
By the end of 2020 we will present the final model of the interdependence between the coronavirus pandemic and oil prices and compare it with the preliminary analysis hereto. References:
