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Most of the previous studies focused on Supply and demand variables and indicated that

fundamental factors are the key drivers of oil prices (Chevillon and Rifflart, 2009; sabel

!ansteenkiste, 20""; #ilian, 2009$% &emand shock have positive effect on oil price (#ilian and

'ee, 20"; #ilian, 2009$% Cuts in )*+C uota leads to increase in oil prices and increase or

sta-nant )*+C uota tend to have ne-ative effect on oil price (Chevillon and Rifflart, 2009; 'in

and .amvakis, 20"0$% Contemporary Research in the field of oil price dynamics indicates that the

speculative factors and financial factors also have si-nificant impact on oil price apart from

fundamental factors%

/inancial factors such as echan-e rate and stock returns determine the crude oil price (1mano

and !an orden, "993; arayan et al%, 2003; 4asher et al%, 20"2; 4eckmann and C5uda6, 20"7;

8an- and 8u, 20"2$% ncrease in emer-in- market stock prices increases oil prices (4asher et

al%, 20"2$% Moreover, the stock returns of lar-e oil producin- and consumin- countries have

relatively stron- dependence ith oil price (Sukcharoen et al%, 20"$% Speculative tradin- can

influence the oil prices ithout any chan-e in fundamental factors (:amilton, 2003$% Sornette et

al% (2009$ postulated that the oil price shocks durin- crisis are due to speculative factors%

Some studies ar-ue that fundamental factors play ma6or role compared to speculative factors

(4reitenfellner et al%, 2009; /an and u, 2009$% 8hereas other studies su--ested that speculative

factors play a si-nificant role compared to fundamental in the oil market (1skari and #richene,

2003; Cifarelli and *aladino, 20"0, Sornette et al%, 2009$% :ence, it is reuired to determine the

drivers of crude oil in different market phases to understand the oil price dynamics%

.o ascertain the effect of fundamental factors, e have used the variables such as )*+C

production, )+C& stocks, )+C& et mports% .he ma6or demand for oil comes from emer-in-

economies and )C+& countries% .o estimate the demand from )+C& countries e consider

)+C& consumption% Since the consumption data for the emer-in- economies is non

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+istin- literature used financial variables such as S>* ?00 (Cifarelli and *aladino, 20"0$, Real