Seismic reflections: Oil market dynamics turn bearish
Five years or so ago, the peak oil theory was very much in vogue. Peak oil combined
with surging demand in the developing world was supposed to lead to tight oil markets
and a consequent upward spiral in prices. A rather different scenario is emerging,
involving a much slacker near- to medium-term supply/demand balance and arguably a
less bullish outlook for prices than consensus opinion expects. The key game changers
are the deep malaise in the world economy, the shale oil revolution, advances in
automotive technology and declining vehicle use in the OECD.