Oslo Stock Exchanges Reliance of Oil: An Empirical Analysis of Factors Affecting Oslo Stock Exchange over Time

Martin Øgreid Danielsen & Martin Norstrand Torgersen

Student thesis: Master thesis

Abstract

This thesis investigates the influence of the Brent crude oil price on the Oslo Stock Exchange, using daily data between January 1st,1988, and December 31st,2019. The influence is estimated by utilizing an OLS multiple regression, where variables correspondent with previous research and conceivable interactions are included. Further, the period examined is divided into two subparts, with the first covering the years from 1988 to 2008, and the second 2009-2019. Accordingly, the distinctive regression models are statistically processed to allow for more secure inferences about the true relationships, in addition to the respective changes in influence throughout time. Finally, an additional variable is introduced to the last model in order to assess the dynamics between the challenged petroleum industry and the rising renewable energy sector.
We find the Brent crude oil price positive and statistically significant in all regression models conducted. Moreover, its associated coefficient carries higher value in subperiod two, compared to both subperiod one, and the full period. Indicating that the Oslo Stock Exchange has been more exposed to fluctuations in the oil price. For the entire period, we find that a one percent increase in the oil price leads to a 0.092 increase at the Oslo Stock Exchange. However, exposure to global financial markets prevails as the most decisive factor. The inclusion of the renewable energy variable does not detriment the effect from the Brent crude oil price.

EducationsMSc in Finance and Investments, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2020
Number of pages116