We like a flutter at C@W, and have been known to make the odd year- end prediction (actually, some rather good ones, though we say so ourselves). Really great market judgments - like John Browne calling the bottom of the oil price at $10 in 1998 - have led to great commercial triumphs (like BP buying Amoco and Arco in 1998-9 ... err, perhaps I could come up with a better example).
But 'econometric' forecasting that claims a mathematical basis, is a bad, expensive joke. The FT has recently caused a bit of a stir - and done us all a favour - by detailing just how bad the Bank of England's forecasting has been, and there should be a great deal more scrutiny given to the performance of professional forecasters in general. The commercial producers of costly forecasts-for-sale are remarkably shy when it comes to offering up their track-records for a bit of retrospective scrutiny, and there's a good reason. (Strangely, their clients rarely ask.)
The US Energy Information Agency - an authoritative source on a range of things - is honest enough to post all the long-term energy-price forecasts it has made over the years, and one can ridicule them at leisure, marveling at how bad they are (around 50-60% wrong over time! - i.e actual out-turn prices have on average been more than double those predicted).
Problem is, (a) many people view EIA price forecasts as being as 'authoritative' as their other output; (b) upon publication they are broadly 'conventional' / 'consensus', meaning that all the commercial forecasters forecast energy prices to be at roughly the same levels - and charge their clients a packet for the dross. On average, it'll all be equally wrong.
Even more troubling for those who believe in this nonsense - if they'd take their fingers out of their ears for a second - the EIA has an excellent track-record in forecasting energy supply and demand. In other words, even with a good grip on the 'fundamentals', there is really no hope of translating this into price forecasts of any value. There are dozens of reasons why this is so.
There is nothing wrong with people cudgeling their brains to come up with a patent algorithm that tells the future. The more you study markets and prices in a scientific, statistically rigorous manner, the more you understand. But let no-one hazard any money on the output, that they can't afford to lose. It's speculation, pure and simple.