Crude Oil Analysis: Relative Prices, Correlations and the Gold-Crude Ratio

In the following series of posts, we shall delve deeper into analyzing crude oil in terms of its relative price in different currencies, the correlations between different currencies and oil prices, and the correlation between crude oil and gold.

Crude Oil Analysis: Relative Price of Crude Oil in terms of Different Currencies

In order to illustrate the changes in the relative price of crude oil in different currencies, an index of relative prices has been calculated by taking the ratio of the WTI spot price on a given date in a given currency to their respective currency-wise price levels in January 2000. The resulting indices of prices help us to evaluate the relative impact of the US dollar depreciation against these major currencies. Currently WTI and Brent are both the most expensive in USD terms and cheapest in AUD terms. For Brent the index is around 4 for USD whereas the prices are only 2.5 times higher than 2000 levels in AUD terms. For Brent the index is close to 5 times higher than 2000 prices in USD terms whereas it is at 3 in AUD terms.

The following two graphs show the relative price of the WTI and Brent prices in different currencies.