Making sense of oil markets in 2019

Modeling energy markets is complicated. Why do qualified professionals who attempt to take on this task get it wrong? Why are we likely to do the same?

Lets take a deep dive together to understand the reasons behind wild swing in crude oil prices. From EIA updates to OPEC monthly outlook, from clean nuclear reactor designs to shale oil, from rising paper trading volumes to growth outlook in Africa, we examine data sources and opinions to see if we should be worried about the world running out of oil in our life time. In our search for answers we run into interesting questions.

Did the Saudis declare war on shale in 2014? Are they like to do the same in 2019? Will we see a functional fusion power plant in the next 5 or 10 years? Or will fusion remain within the realm of science fiction? How much crude does the world consume in a given day? How much do we produce? Are electrical vehicles going to take over the world? When they do what happens to big oil? How many years of oil do we actually have? How good a job energy policy wonks do? Why is there so much conflict and contradiction in opinions about oil prices?

Can we find credible data to answer these questions? We try. A brand new series on crude oil in five parts.

Part I — A model for crude oil prices.

The structure for our basic model including a core thesis and the reasons why modeling oil is complex.

Part II — Modeling demand for liquid fuels in 2019

A demand model for crude oil based on outlooks from EIA, OPEC, BP and others.

Part III — Supply side questions for crude oil in 2019

A review of the supply side equations and likely sources of surprise in 2019

Part IV — Crude oil price directions — Market and signals in the data.

What does the data say? Signals from the data set.

Part V — Oil market time machine. Past, present and future.

Context, history and future trends. Tools for translating signals from the data set. Takeaways and conclusion.