Tuesday’s report released by the U.S. Energy Department proves only two things: That predictions will change on a monthly basis, and that the general trend in the price of crude oil and natural gas is down for at least another year, perhaps two.
It predicted that Brent (London-based pricing) crude oil will average $34 a barrel in 2016 and $40 a barrel in 2017. Those prices are down from $37 a barrel and $50 a barrel predicted just last month. And January’s report from the Energy Information Agency (EIA, the statistical department of the Energy Department) also predicted figures higher than the latest numbers: $40 a barrel in 2016 with West Texas Intermediate (WTI, priced in Oklahoma City) at $38 a barrel in 2016 and $48 a barrel in 2017.
If the professionals don’t know, how is anyone else supposed to know? EIA administrator Adam Sieminski tried to answer:
Global inventories over the next two years are expected to grow more rapidly than [we] previously expected because of higher world production and less oil demand due to weaker economic growth worldwide.
Higher growth in world oil inventories tends to delay the rebalancing of supply and demand in the global market, keeping prices low.
Translation: There are so many moving parts to these predictions that it’s hard to keep up. But we’re doing the best we can.
No comments:
Post a Comment