Oil markets: the next up-cycle?

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

Oil prices could rebound sharply to the upside in the aftermath of the COVID crisis, as c10Mbpd of shale supply growth has been lost or deferred. The result is steep undersupply in 2022 and unprecedently low inventories across the mid-2020s; or in other words, the next industry up-cycle.

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 in 4Q20. Included with the download is a PDF summary of our latest oil price thesis,  which is also available separately, linked here.