If ever there were a case for multiple scenario analysis, the past few months in energy markets would likely qualify. On “base case” analysis alone, domestic and international energy agencies vary considerably in their forecasts of demand and, especially, supply, as do major research houses. Add in the thorny issue of OPEC policy, and the range of outcomes expands even more.
A number of issues are in the mix. U.S. storage in Cushing, Okla., widely recognized as holding the last inventories to be drawn down, were in mid-February at levels last seen in December 2014. But production of U.S. crude is on a tear, having already topped the historic 10 million barrels per day (MMbbl/d) late last year. Projections for U.S. growth this year differ, but in some cases will reach 2 million barrels of oil equivalent per day (MMboe/d).