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From Econ 101, I thought markets are supposed to equilibrate so that there isn't any excess supply or excess demand.

But from a WSJ story, we have the chart below. I believe it says, for example, that in 2018Q4, oil supply exceeded demand by about 1.7 or 1.8M barrels per day. And in 2019Q2, demand exceeded supply by about 0.3M barrels per day.

What do the numbers mean?

During 2018Q4, where did the daily excess supply of oil go? Was it just discarded somewhere?

During 2019Q2, were there buyers of oil who wanted to buy about 0.3M barrels of oil per day at the prevailing prices but were unable to due to excess demand? If so, why didn't the price of oil adjust accordingly to eliminate this situation of excess demand?

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  • $\begingroup$ There are stocks of oil, made up of a combination of normal operational requirements, strategic reserves, and speculative holdings (especially when the market is in contango with the forward price above the spot price). Total stocks fluctuate and these fluctuations represent the differences between production and consumption. Forecasts of the future fluctuations are rarely skilful: it is more common that prices change in unexpected ways affecting supply and demand. $\endgroup$ – Henry Aug 3 at 20:03

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