Oil markets: finding the balance?

Our oil market supply demand balance is informed by a 45-line model, running month-by-month out to 2025. This download contains both the model, and a 4-page summary of our outlook, from mid-2021.

After ten years forecasting oil markets, our humble conclusion is that all oil models are wrong. Some are nevertheless useful. To be most useful, our model takes a Monte Carlo approach to the key uncertainties, to quantify the “risk” of positive and negative surprises (illustrative example below).

Please download the model to see, and to flex our input assumptions. Included with the download is a PDF summary of our oil price thesis in mid-2021,  which is also available separately, linked here.

Important note. The past 2-3 years have been a nightmare for oil market supply demand balance forecasting. We think there is over 3Mbpd of oil demand pent up still to recover in 2022+ from post-COVID. Also, to state the obvious, if there is a major disruption to Russian oil supplies, then oil markets will be under-supplied. And so we do not think we can currently add value by ‘forecasting’ oil markets at all in 2022. We will re-visit this topic in depth in 2023.

Copyright: Thunder Said Energy, 2019-2023.