demand shock investment & finance definition

The sudden rise or fall of prices based on the expectation that demand for a product will soar or fall. For example, the energy market often is impacted by demand shocks. Typically, the anticipation of extreme cold snaps in areas of the United States, such as the Northeast, that use heating oil drive demand and prices substantially higher. Prices have even doubled within a month in extreme situations. It is the market’s perception of demand, rather than the actual demand, that creates demand shocks.