Publications: Notes at the Margin

"Truth" Cannot Be Found in the Model! (May 26, 2015)


The financial and energy sectors have become, it seems, too “data dependent.” In particular, those following the energy market remain ensconced in “barrel counting” and so will likely miss the most important story of the year: the unanticipated fall in non-OPEC production and, in particular, the drop in US output. Simply stated, the market and the model projections have diverged. The markets tell us that global supply and demand are nearly balanced. The models, on the other hand, claim a global surplus of as much as three million barrels per day exists. This week's report explores these two divergent views and the potential market impact of one or the other proving true.


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