Oil supply glut demand desert

THE HIGHGROUND VIEW

Understanding why oil markets are “sticky for prices” needs a look at the basics. Oil markets are among the most liquid, most traded and most sought after – not only by investors, traders and hedgers, but also by economic and monetary policy makers of the world, due to the geopolitical sentiment that runs alongside oil. This highground can, and often does shade the basic supply-demand energy role of oil to an also-ran, but this has limits.

What we know for sure is oil’s role in world energy has declined – not crashed but declined – on a constant long-run basis, almost unrelated to annual or multi-annual average prices. In 1973 oil supplied about 53% of world energy, but today it provides about 32%. By 2020, it may supply only 27%. This, for starters, should take the crisis-word out of oil analysis.

Read the rest of this article by Andrew McKillop, AMK Consult.