Crude oil price futures and stock markets returns: what do their correlations tell us?

With the increasing recognition that oil price shocks are just symptoms of more fundamental shocks happening in the global crude oil market, it has become imperative to know what drives oil price changes at a particular time period. This note illustrates how we can use the correlations between stock prices and crude oil futures prices in assessing whether the current oil price movement is driven by supply- or demand-related shocks. This note also offers potential implications of crude oil price shocks on ASEAN economies.