Publications: The Petroleum Economics Monthly

The Failure of Traditional Oil Market Fundamentals (October/November 2018)


To be blunt, the supply/demand balance approach to assessing oil markets—and many other physical commodities—is irrelevant today. Twenty years into the twenty-first century, the traditional way of modeling commodity markets is obsolete. Those using it can be likened to professional race drivers stocking the pits for their Formula 500 cars with buggy whips instead of spare tires. Put simply, the supply/demand balance methodology is dead. It was killed by the surge in US oil production.


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