The bear market case for oil: 4 reasons why oil prices are drifting lower

Not so, Morse said.

Before the pandemic, gross domestic product growth of one per cent a year implied about half-a-per-cent growth in oil demand, Morse said. But that elasticity has fallen, and the fall is about to get sharper. ​And if demand is only to grow by 0.5 per cent, that is just 500,000 barrels a day. Can the world find that much extra oil? “It’s not hard,” he said.Looking at growth in oil-producing hubs around the world, supplying that growth looks pretty easy.

Arguments that a lack of investment — in the U.S. shale patch and beyond — will curtail supply in the coming years are overstated, he said. “As far as we can tell, the argument that costs are going up and spending is going down is wrong, because it misses the greater efficiency of capital use.”

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