The OECD forecasts that oil will be up to $190 per barrel by 2020, see The Price of Oil -Will it Start Rising Again? wp 1031. This is much higher than the IEA forecast of $120 per barrel in the same year. The OECD forecasts is based on factors that we have seen before. The demand for oil in China and India and the rest of the Non-OECD will be the key driver. If oil demand returns to anything like what was seen in the pre-crisis period, we should be in for higher prices.
This demand equation is the key to any oil price forecast, will global growth be like the past or are we in a new world where there is less growth a slower globalization and trade. Determining the direction of world growth is what oil forecasts seem to be about. Supply is important, but we are seeing the clear focus on the demand side of the equation. Supply is base don innovation which is much harder to model.
However, if you look ta the futures curve, you will see more focus on supply. The long-tern futures curve is humped with prices in the distant years actually lower than what we see today. The Brent curve is down ward sloping and shows a price below $95 out in 2020. The WTI curve shows a price of $84 in 2020.
So who are you gong to believe. The sophisticated researchers or the rough and tumble futures market.
This demand equation is the key to any oil price forecast, will global growth be like the past or are we in a new world where there is less growth a slower globalization and trade. Determining the direction of world growth is what oil forecasts seem to be about. Supply is important, but we are seeing the clear focus on the demand side of the equation. Supply is base don innovation which is much harder to model.
However, if you look ta the futures curve, you will see more focus on supply. The long-tern futures curve is humped with prices in the distant years actually lower than what we see today. The Brent curve is down ward sloping and shows a price below $95 out in 2020. The WTI curve shows a price of $84 in 2020.
So who are you gong to believe. The sophisticated researchers or the rough and tumble futures market.
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