While there is a long list of potential factors that could surprise the market in 2019, OPEC+ supply curbs create a tightening baseline that should lead to higher oil prices as the year wears on.
The dramatic slimming down over the past half-decade by the oil and gas industry has led to a steep drop off in spending, exploration and final investment decisions on new projects—raising the possibility of a supply crunch in the early 2020s.
National data shows 2018 EV sales are up 83 percent on 2017—but the realities facing the EV industry and oil's virtual monopoly on U.S. transportation fuels means the inflection point in transforming our transportation sector has yet to be reached.
Although supply-side dynamics have hogged the spotlight recently, world oil demand this year is expected to average over 100 Mbd—a symbolic benchmark that is more than 13 Mbd higher than it was a decade earlier.
Reinstituting subsidies could prevent the demand destruction that would otherwise occur from a rise in prices.
For the first time since the price collapse, international drilling is finally picking up at a time when the blistering growth of U.S. shale is set to take a breather because of pipeline constraints.
OPEC officials warn that underinvestment may lead to a price spike, but major oil producers do not have a strategy to meet longer-term demand growth.
Circumstances in the oil markets are expected to change, perhaps dramatically, early next decade. While U.S. production is expected to grow by a massive 2.5 Mbd in 2018-19, increases will thereafter slow considerably.
Jet fuel demand growth appears guaranteed in coming decades with increased aviation travel and limited substitutes in this area.
Two major forecasters see a sharp penetration of EVs in the next couple of decades. Although the outlook for EVs and the transportation sector is improving quickly, oil demand is likely to continue to grow.