Para leer en español haga clic aquí: Los mercados del crudo de Estados Unidos suscitan variedad de opiniones
Few people are often in complete agreement. Each reaches a conclusion based on their own past experiences and expectations. Disagreements often manifest in descriptions of the same thing, which are presented with supportive information, which all may makes sense to those presenting the subject matter — but for those who may have supportive evidence backing the opposite, contrary views can sometimes be vexing.
Opinions on the future of the crude oil markets are no different.
This was the case at the Platts 5th Annual North American Crude Oil Summit held the first week of March in Houston, where many industry experts presented insights and their views on the direction of the crude oil market. Will crude production continue to fall? How high (or low) will prices go in 2016? What kind of volume of crude exports could we possibly expect?
These are all questions that came up during the conference, but depending on you asked, there were various expectations. It was like the tale of the six blind men who set out to determine what an elephant looked like by feeling different parts of the mammal’s body. And like in the tale, while one’s subjective experience may be true, it may not be the totality of the truth.
In the tale of the blind men and the elephant, one man feels the elephant’s leg and says the elephant is like a pillar; one who feels the tail describes the elephant as something similar to a rope; one who feels the trunk says it is like a tree branch; one who feels the ear says the elephant is like a hand fan; one who feels the belly says the elephant is like a wall; and the one who feels the tusk says the elephant is like a spear.
Many versions of the story itself exist still today. In some, the disagreeing blind man become extremely violent towards each other. In another, the blind men listen to one another and learn from each other’s perspectives. But it isn’t until the end of the story that the blind men learn that they are, in fact, all blind, when a man who can see the elephant in its totality describes it to them.
During the Platts Crude Oil Summit, presenters from different companies and positions in the market held a wide range of market views. Some expected the crude oil market to recover to levels near $80/b by the end of 2016. Some held the number closer to the $50/b level. Still, most agreed that crude oil prices had reached bottom and didn’t expect it them to fall much further, if at all.
In addition, though disagreements persisted on how much production had fallen, there was a consensus on the fact that it had fallen. Even some forecasts that until recently held that crude oil production in the US would rise in 2016 have now succumbed to the realization that production is unequivocally in decline — down as much 800,000 b/d since the mid-year peak of 9.6 million b/d.
In a way, there’s only a certain amount of deviation that the blind men in the original tale should have derived from their experience. After all, none would describe the elephant as something that was smaller than a dog, otherwise they would not be labeled as just blind but also as incoherent or insane. In addition, the blind men were not deaf so they should have heard the elephant breathe and bellow loudly, so they should have had an idea that the elephant was something large.
Perhaps upon leaving the conference, attendees left with a wide variety of ideas and expectations on the direction of the US crude oil market and the market as a whole. But in the end, attendees trusting their own senses should have reached their own conclusions — perhaps that that shale oil production in the US has fallen and continues to fall, that crude oil prices have most likely already reached a bottom, or that the resilience of shale oil was overstated.