After a 50 percent rally in oil prices between February and March, crude has retreated a bit as of late. The upcoming OPEC-Russia meeting in Doha looms over the markets, but few expect the outcome to have any material impact on supply and demand. Global supply still exceeds demand, but there are solid signs that the overhang is finally starting to ease. Storage levels are high, but are expected to come down. 

Where does that leave us? With so many energy investors unsure of where the markets are heading, Oilprice.com decided to get in touch with Mike Rothman at Cornerstone Analytics – a macro energy research firm that has produces some of the most accurate data out there. Oil prices may be gyrating up and down, but Mr. Rothman provided some juicy clues for investors, highlighting some key near-term trends for crude oil. 

A few topics covered: 

Oilprice.com: The IEA has been accused of overestimating global supplies. The WSJ says that somewhere around 800,000 barrels per day are unaccounted for, meaning they are not consumed nor have they ended up in storage. Are these “missing” barrels a big deal?

Mike Rothman: The issue has not been one of the IEA over-estimating supply, but rather under-estimating demand. There are basically two ways to arrive at figures for global oil demand. The IEA methodology is built on an estimate of GDP and an assumed ratio of oil demand growth to GDP growth. 

For the emerging markets in particular, that methodology represents a leap of faith since there are >100 countries and close to real time measures for economic activity rank up there with seeing unicorns and leprechauns. Also, in countries where we have better and more timely data for demand and GDP (like the U.S.), we see that oil demand growth to GDP growth ratio fluctuate sharply.