The Influences of Liquidity Surplus on the Price of Fuel Oil Future in China

Taking M₂, the broad money supply, as the index of the level of liquidity and M₂/GDP as the index of the surplus of liquidity, the paper examines systematically the long-term and dynamic relationship among the price, the level of liquidity and the surplus of liquidity. The results suggest that it is the surplus of liquidity instead of the level of liquidity that influences the fuel oil future. The long-run equilibrium relationship between the surplus of liquidity and the price of fuel oil future is stable, and there is a one-way causality relationship running from the surplus of liquidity to the price of futures between them.