Empirical analysis on macroeconomic variables and oil price in Malaysia / Wan Damia Aisyah Wan Mohamad Tajeri

The oil and gas industry as a whole are prominent in the Malaysian economy, having fully contributed one -fifth of its GDP over the past decade. By itself, the Malaysian gas industry produced and sold local market gas worth more than RMI 0 billion in 2017. Like any commodity, stock or bond, supply and demand laws cause oil prices to fluctuate. When supply exceeds demand, prices fall; the inverse is also true, when demand exceeds supply. While supply and demand influence oil prices, it is oil futures that set oil prices. Due to these circumstances, the purpose of this study is to investigate the factors influencing oil price fluctuations and their relationship with macroeconomic variables from 1990 to 2019, each year. Using the Ordinary Least Square (OLS) method, the topics studied will be examined. Data from Malaysian oil prices are used as dependent variables while four (4) other variables, namely, foreign direct investment (FDI), gross domestic product (GDP) inflation rate, and interest rates are used as independent variables. Findings from this study indicate that real interest rates have a significant relationship with crude oil prices.