Monday 9 November 2015

Oil Price Revisited

Banks and other sage commentators are wont to publish oil price forecasts - why, I do not know.  Back in March - yes, March 2015, when WTI was $48 - here is what the pundits, gazing forward a mere 6 months, were predicting for 4th quarter, i.e. now.
UBS                         50
Barclays                   52
SocGen                    54
Bank of America       57
Deutsche                 57.5
Intesa SanPaulo        62   
Morgan Stanley        70
Commerzbank          72
ING                          73
Std Chartered           84
And where is WTI just now?  $44, since you asked: it's been below $50 for four months.  And these people have jobs! - as my mother-in-law says.  Well, I suppose there are a few more weeks left in 4Q for something to come along and restore the average back up to, errrr, $84 ...

Here are some things they should think about carefully, from the famous BP Statistical Review, 2015 edition.  Exhibit One:

There's a lot of oil in them thaar hills     Source:  BP
Growth in proven reserves of natural gas is equally impressive.  And by way of another salutary factoid: in all the chaos, how do we think Iraq's oil production has fared?   A bit inhibited by all that fighting, maybe?  Exhibit Two: Iraqi production, 2005 - 1.833 million barrels per day;  2014 - 3.285  mmbpd, having increased consistently year-on-year over that decade.

Oh yes, plenty of oil'n'gas around: good luck to the Greens and all who believe in peak-anything.  Where next?  Well I'm staying out of the forecasting business, that's for sure.



CityUnslicker said...

Quite the more important sttistic is oil usage growth which is tited to global GDP. That still grows too but imports to china are shrinking; no future rise for oil prices until a major event hits the world again.

James Higham said...

Russia must be having fun with this price.

Dick the Prick said...

That really is quite impressively poor forecasting.

andrew said...

Early next year I look forwards to reading the 'how we got it so wrong' reports from these people.

If they don't produce one, they really should look for another method of passing time.

Elby the Beserk said...

"And these people have jobs! - as my mother-in-law says."

Very good :-)

Demetrius said...

I spend quality time reading stuff on this subject. It is very complicated and intricate and difficult, it is not economics as we know it, Jim. The site Energy Matters is very useful. There are too many balls in the air as the juggler said when he fell into the orchestra pit.

Professor Pizzle said...

The Greens dropped the Peak Oil scare a while ago now (it's always fun to remind them of it).

They've moved on to using lies, bullying and legislation to keep it in the ground.

Nick Drew said...

DtP - actually par for the course, the hisory of professional price forecasting is appalling

my all-time favourite was the much-touted chief economist of a well-known firm of 'econometricians' (widely and endlessly quoted on MSN: no names, though, mustn't get into slander here) who, at a private conference for his subscribers in December 2007, stated categorically that there would be no banking crisis and no recession

in his deathless words "for a nearly decade now we have been been enjoying the Great Moderation - low inflation, low interest rates, low unemployment. This is because the governments of the world have at last discovered how to run their economies. They aren't going to forget how to do it now"

fucking idiot (that's vulgar abuse - permitted under the, Act M'Lud)

BTW, he is still the much-touted chief economist ...

Anonymous said...

$84? No wonder Standard Chartered's share price is absolutely in the shit.

andrew said...

Nice comment in the economist espresso this am

... "Oil prices are at the mercy of market forces for once, rather than the whims of a rent seeking cartel."