Publications: Notes at the Margin

Ignoring the Elephant in the Room (August 21, 2017)


A question asked occasionally is "where does an elephant sleep?" The answer is wherever the elephant chooses to sleep. Today, regarding oil markets, the elephant is sleeping in non-OECD countries. Those who follow the market today are ignoring this elephant. No, that is not quite correct. Rather, while they remind readers that more than half of global consumption today and most of the growth is concentrated in non-OECD nations such as India and China, when it comes to inventories everyone—all publications and all analysts—focus only on OECD stocks. Indeed, many seem to assume that non-OECD stocks are following the path of OECD stocks. This could be a big mistake.


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