WACC in OECD countries (SK NACE 1920) and speculative trading volumes on the oil market: A five-year correlation study

Research background: The petroleum products manufacturing sector is a key industry in the international trade of crude oil. The activities of this sector exert a significant influence on the global economy, particularly through the production and processing of oil, which represents a vital commodity for the daily functioning of societies worldwide. Purpose of the article: The main goal of this research is to calculate the correlations between the WACC and the volume of speculative trading positions in the crude oil market. Speculative trading in the context of this research is considered the trading volume of futures or options contracts without any direct involvement in the underlying physical commodity. The analysis primarily examines the relationship between the WACC and Brent crude oil futures prices, emphasizing the significant role of the futures price volatility in the companies’ costs of capital. Methods: The article calculates the weighted average cost of capital (WACC) for the petroleum products manufacturing sector in the member states of the OECD. Overall, 96 calculations of WACC are made for companies from 16 OECD member countries. Findings & Value added: Country-specific disparities in WACC are identified, with Greece, Poland and Germany showing the highest values, which reflects the variable economic and market conditions. While speculative trading is proven to have no direct effect on the WACC, its indirect impact through crude oil price volatility is significant. A potential indirect effect through crude oil futures price volatility emphasizes its role as a significant factor influencing the financial environment for companies in the petroleum manufacturing sector. If we assume a continually rising trend in the traded oil futures positions, we consider further studies on the relationship between the WACC and speculative trading of great importance. The findings of this research contribute to understanding the financial implications of crude oil market dynamics and provide actionable insights for corporate risk managers.