Publications: Notes at the Margin

The Difference of a Decade (January 15, 2018)


What a difference a decade can make. Ten years ago, in January 2008, the global oil market was entering a period of severe tightness. WTI traded for $93 per barrel and Brent at a discount to WTI. Some economists warned that oil prices could rise to $120. A real-estate boom was under way in the United States, and Goldman Sachs was urging investors to put more money in commodities, predicting ever tighter markets as China gobbled up copper, iron ore, and, of course, oil.


Ten years ago, the speculators egged on by Goldman were buying NYMEX oil futures aggressively. Their actions would contribute to the crude price rise and lead to oil market investigations that would last almost a decade. At the time, this speculative buying was blamed for crude prices reaching $120.


Ten years later, the oil market is very different. So is the oil industry. Indeed, its entire economic basis has changed.


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