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The craziest oil price predictions for 2017
Predicting where oil prices would go next month or next year has always been a game of hit and miss, all the more so in the past two years since the oil price crash began.
Analysts have forecast prices in the range US$10 to US$70 at various points this year, and actual prices have also had a bumpy ride, with WTI Crude ranging from below US$30 in January 2016 to a 17-month high briefly touching over US$55 on December 12, 2016.
Heading into 2017, the oil price predictions by major organizations and investment banks are generally not widely diverging and hovering in the US$50-$60 range, but there have been some wilder viewpoints that are phenomenally bullish or direly bearish.
In February of this year, when WTI was just over US$31, Brandon Blossman at Tudor Pickering Holt & Co said he expected oil at US$70 by the end of the year, and at US$90 by the end of next year, commenting on the Colliers International Trends 2016 Commercial Real Estate Market Update, as quoted by Houston Agent Magazine.
This prediction came less than a month after Standard Chartered had said it expected oil to hit a low of US$10 this year, a level not seen since 1998.
Both forecasts missed by miles. By June this year, prices had touched US$50, but not much more.
It was in June that Raymond James’ Senior VP Pavel Molchanov said that global inventories would reverse their growth and start declining in the second half of the year and accelerate the decline in 2017. Raymond James forecast WTI at US$75 in the first quarter next year and at US$80 in the fourth quarter of 2017.
Six months later, with oil trading 20-ish-dollars below the Raymond James forecast, Molchanov continues to be bullish on oil after the OPEC deal to curtail output. On 30 November, he said that with global demand “quite strong” and “in very good shape”, oil prices in 2017 have to be “meaningfully higher, even after the recent rally, to support a more sustainable level of investment”.
In a Reuters poll of 29 analysts and economists carried out after the OPEC deal, Raymond James had the highest 2017 forecast for Brent price, at US$83 per barrel, while the poll saw Brent averaging US$57.01 next year.
On the opposing side is Shawn Driscoll, portfolio manager at the T. Rowe Price New Era fund, who told Barrons.com earlier this month that “we’re in a secular bear market for oil”, expected to go on for 10 to 15 years. Other analyst projections are “massively”underestimating how quickly and how big the U.S. shale comeback will be, Driscoll said, adding that he sees oil at below US$50 at the end of 2017, and a “dip below $40 a barrel”at some point in 2018.
Most of the other projections in the past month or two—prompted by the pending OPEC deal and then the cartel’s agreement to cut output–have not only talked oil prices up, but made more analysts optimistic that an agreement would speed up the drawdown of the global oil glut. The market is likely to move into deficit in the first half next year by an estimated 600,000 bpd, said the International Energy Agency (IEA), as long as OPEC and non-OPEC producers manage to (and are willing to) stick to promised cuts.
More than a month before the deal was announced, the World Bank raised its oil price forecast for 2017 to average US$55 next year, or US$2 more than its earlier forecast.
At oil above US$55 next year, energy consultancy Wood Mackenzie sees the oil and gas industry turning cash flow positive for the first time since the downturn, and expects 2017 will be a year of “stability and opportunity” for the sector.
In its latest Short-Term Energy Outlook from December 6, the U.S. Energy Information Administration (EIA) expects Brent Crude prices to average US$51.66 in 2017, with WTI Crude prices averaging US$50.66 next year.
However, EIA warned: “The values of futures and options contracts indicate significant uncertainty in the price outlook.”
BofA Merrill Lynch – one of the optimistic viewpoints among the investment banks – said in its 2017 Market Outlook that its forecast for WTI Crude is US$59 and Brent – at US$61. BofA Merrill Lynch also factors in a rebound of the U.S. shale patch in its price projections.
“Pricing forecasts embed a sequential 500,000 barrel-per-day increase in U.S. crude production, raising domestic output to 9.2 million barrels a day by the end of 2017,” the bank said.
As always, the game of predicting oil prices will have its winners and losers next year, too. But 2017 has some major wildcards for oil prices in store, including, but not limited to: Would OPEC stick to promised cuts? Would those cuts rebalance the market at some point next year? Even if they start the year with sticking to cuts, would some OPEC and non-OPEC producers start cheating and renege on pledges once they see more revenues at higher oil prices and be tempted to get more revenue? How fast U.S. shale would rebound? How would this affect global supply and oil prices? How would OPEC react to the U.S. shale resurgence?
Let the game begin, and beware of projections, which range from $10 to $90.
31 Comments on "The craziest oil price predictions for 2017"
dave thompson on Sun, 8th Jan 2017 3:22 pm
WTI at $59 will not bring up Us domestic production, am thinking it would take six months of $80-90 to bring back US production. Then the economy crashes and we are back to square one.
BobInget on Sun, 8th Jan 2017 3:45 pm
Numbers for Chinese and Indian demand growth (4.7%- 4.8%) in 2016 speak for themselves.
http://www.wikihow.com/Calculate-Growth-Rate
Throw in sugar high of a US economy intent on doubling existing debt…
(see US SUV and PU sales)
A thin skinned, ego driven Twitter In Chief…
One Billion equally offended Muslims..
Wealthiest dictator on the planet; V.Putin, vs
The Saudi Royal Family.
Rising sea levels:
https://www.washingtonpost.com/news/energy-environment/wp/2017/01/06/the-crack-in-this-antarctic-ice-shelf-just-grew-by-11-miles-a-break-could-be-imminent/?utm_term=.0ea9ca337862
This berg the size of the state of Road Island will calf sometime this Antarctic summer. When it does, million year old land ice, the size of Denmark, will begin to dramatically raise
sea levels for the next decade and beyond making believers out of deniers.
While it’s way late to stop catastrophic sea level rise, there may still time, ten, twenty years, to build massive walls, relocate billions inland.
How can any mortal pick a top for this oil market?
BobInget on Sun, 8th Jan 2017 3:51 pm
Dave, US production is already on the rise in expectation. Most shale US shale junkies weren’t making money at $100. It’s not about making money from shale, it’s about selling stocks..
Boat on Sun, 8th Jan 2017 4:04 pm
Dave,
US production has already been rising. Rig counts continue to rise. That all started at $40 oil and has accelerated as prices went to $50. At $59 the fracking will continue to expand at a frisky pace. Seen the production charts from The last 6 months?
Kathy C on Sun, 8th Jan 2017 4:06 pm
Bobinglet
What is you basis for calling Putin a dictator? Per wiki “A dictator is a ruler who wields absolute power.” Do you know that Putin has absolute power? Did he not get elected? Do you know if the elections were fair or rigged?
“Vladimir Putin isn’t a dictator. He’s a statesman. A good statesman or a bad statesman, that’s a different question.’
In reality, Putin’s position as president of Russia is more complex than that of a personal dictator. He’s more often factional referee than autocrat. “There are many towers in the Kremlin” is a popular line among Russian political analysts.”
Per http://www.abc.net.au/news/matthew-dal-santo/5423138 Matthew Dal Santo is a Danish Research Council post-doctoral fellow at the Saxo Institute, University of Copenhagen, where he is leading a project on history and identity in modern Russia. He previously worked for the Department of Foreign Affairs and Trade and is a former Fellow of Trinity College, Cambridge.
What is your basis for assesrting that he is richer than say the actual dictator of Morocco who per wiki is the 5th richest royal in the world at $5.7 billion
https://en.wikipedia.org/wiki/List_of_the_richest_royals
Mainline western media propaganda is alive and well. Question what they tell you every time the talk, especially when the repeat something over and over. The more they repeat short mantras like “Putin is a dictator” the more likely they are lying.
Sissyfuss on Sun, 8th Jan 2017 4:47 pm
Trump would be 5th on your list according to his claims of wealth, Katherine. And he certainly a royal, pain in the arse that is.
dave thompson on Sun, 8th Jan 2017 7:35 pm
FYI https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0ahUKEwjOzo7I9bPRAhUG5IMKHQgJCa4QFggsMAA&url=https%3A%2F%2Fwww.dmr.nd.gov%2Foilgas%2Fstats%2Fhistoricalbakkenoilstats.pdf&usg=AFQjCNHnOgof9kGKh4Pv5xkp-2v2ln6gDg stats
dave thompson on Sun, 8th Jan 2017 7:36 pm
Bakken stats look to be in decline.
Kathy C on Sun, 8th Jan 2017 7:37 pm
Sissyfuss, my name is Kathy not Katherine and my Kathy is not derived from Katherine.
The list that I linked to was not MY list, it was wikipedia’s list.
Trump is not a dictator so his wealth wasn’t relevant to the discussion. Those in the George Bush administration who wanted a “unitary executive” are now strangely silent. https://en.wikipedia.org/wiki/Unitary_executive_theory Doesn’t look they will push to make Trump a dictator.
Maybe Trump will become a dictator, maybe not. He may be a big pain in the ass, but he doesn’t seem to want war with Russia (Hillary seemed ready for war). If we have war with Russia it will certainly speed up the time frame to extinction.
http://www.express.co.uk/news/world/724410/Vladimir-Putin-Russia-east-coast-satan-nuclear-weapon-Hiroshima-Nagasaki-world-war-3
Russia might technically win a nuclear war (they have been preparing not only their miltary but also their citizens for such a possiblity http://www.businessinsider.com/russia-prepares-nuclear-war-wwiii-2016-10 ) but Putin seems to be doing all he can to avoid one as in the end no one wins.
So if Hillary had won and gotten her war all the issues of the progressives would become irrelevant. No gay rights after a nuclear war – no rights at all when no one is alive. Racism becomes a dead issue because everyone is dead. Equality becomes a dead issue because in death we are all equal.
So if you value life, be glad Trump, however despicable he is, won. If you think extinction sooner is better than extinction later, well Hillary was our girl for that and now we might have to wait a bit for climate change to do us in.
Outcast_Searcher on Sun, 8th Jan 2017 8:00 pm
And ironically, Dave Thompson kicks off the thread with another crazy prediction.
Sounds like another ETPer, who keeps insisting that $90 oil will “crash the economy” even though oil averaged that from 2010 into 2014, neither crashing the global nor the US economy. In fact, both the global and US economy kept growing, generally, throughout that period.
There are many thousands of self proclaimed economic “experts” writing blogs (many of whom used to write financial newsletters) to make a living selling their advice.
Funny how they can’t make a living by investing on their prescience, much less becoming wildly wealthy.
Now, add thousands of active mutual fund managers who collectively can’t match completely passive (brainless) index fund investing, but charge fairly high fees on average for their “expertise”.
My response to this article is: “So what? The only surprising thing about oil price forecasts would be if there WEREN’T a lot of them”.
GregT on Sun, 8th Jan 2017 8:09 pm
Thanks for your input Kathy C. Sounds like you have a good head on your shoulders.
GregT on Sun, 8th Jan 2017 8:14 pm
“In fact, both the global and US economy kept growing, generally, throughout that period.”
Of course Trillions of dollars in un-repayable debt, (claims on future production) had nothing at all to do with that growth. Ignore that iceberg on the horizon, the ship is unsinkable.
Full steam ahead!
Boat on Sun, 8th Jan 2017 8:30 pm
greggiet,
When it is cheaper to buy a home than to rent, of course there will be more debt. When you can buy a car for 0 percent rates would you go into the stock market and take out funds for the car while earning at least 10 percent for decades. Of course not. Don’t fear debt unless it costs around 8 percent or more. Then paying cash may be the better choice. This is how one learns to think. Save and invest but do what’s cheapest.
makati1 on Sun, 8th Jan 2017 9:24 pm
Boat just doesn’t get it, does he GregT? Or he is scared shitless to admit he understands how close to the edge of destruction the U$ is. The world has been propped up by printing presses all over the world. The party is about over and the consequences of that printing is going to destroy the world economy, globalization, and the 1st world.
GregT on Sun, 8th Jan 2017 9:45 pm
Boat,
“When it is cheaper to buy a home than to rent, of course there will be more debt.”
The home doesn’t belong to you until it has been paid off. In the interim, you are renting it from the bank. Don’t believe me? Stop making your mortgage payments and watch what happens.
“When you can buy a car for 0 percent rates would you go into the stock market and take out funds for the car while earning at least 10 percent for decades.”
I’ve never had a car loan Boat, I’ve always paid cash. I’ve never had the need to dip into my investments to pay for my daily needs. I consider my investments to be disposable. If/when another market correction occurs, it won’t make any difference at all to me. Zero debt, zero worries. I’m not dependant on anybody else to take care of my assets.
GregT on Sun, 8th Jan 2017 9:53 pm
“Boat just doesn’t get it, does he GregT?”
Boat is the poster child for how well the propaganda works mak. I’ve never experienced anybody so completely brainwashed, in my entire life.
Sissyfuss on Sun, 8th Jan 2017 9:57 pm
Kathy, sorry if you took my remark to be offensive. I agree with you on most of your observations. HRC wanted to establish a no fly zone over Syria that Putin would not have tolerated.I have followed McPherson for several years and regrettably agree with some of his most dire predictions. I have a tendency to gravitate between hopeless folly and intense depression over the path and inevitable destination our species has chosen.Trump to me is further proof that all is lost.
Kathy C on Mon, 9th Jan 2017 4:47 am
Sissyfuss, sorry I misunderstood your remark. Weather about to improve. Time for me to get outside and enjoy the sun and leave the blogging world again 🙂
Cloggie on Mon, 9th Jan 2017 5:17 am
Trump would be 5th on your list according to his claims of wealth, Katherine. And he certainly a royal, pain in the arse that is.
Not for everybody Siss, only for natural born commies like you. 😉
Sissyfuss on Mon, 9th Jan 2017 8:45 am
Socialist, Cloggard, Socialist. Feel the Berne.
Cloggie on Mon, 9th Jan 2017 8:56 am
Socialist, Cloggard, Socialist. Feel the Berne.
“Commie” in the broadest sense means aiming to ram the entire planet in a Single World Commune (NWO).
Unless you sink on your knees now and with tears in your eyes declare that you are sorry for the US empire and its multicult and begin to advocate its dismantling, I’ll keep calling you a “commie”.
Don’t take it personal.
Sissyfuss on Mon, 9th Jan 2017 9:56 am
I would love to see a single world commune if it consisted of 500 mil humans and no more.
And commie is a pejorative because it connotes a system run centrally by elites.
sidzepp on Tue, 10th Jan 2017 10:21 pm
The bottom line is that the ‘have’s’ want to continue to hold on to what they have. The almost ‘have’s’ are envious of what the ‘have’s have and desire to have what the have’s have. And the vast majority of people are just attempting to have a few scraps off the table.
For the year 2017. The rich will get richer. The environment will continue to be devastated as we continue to ravish it. There will be wars and rumors of war. And crude might go up or it might go down and all of us who are addicted to the internet will continue to watch on the sidelines and make our Monday morning analysis.
Davy on Wed, 11th Jan 2017 7:14 am
“Energy’s Drunken-Sailor Legacy Hangs Over Plans for Debt Rescues”
http://tinyurl.com/hkoo3js
“Debt-laden energy companies that still don’t have a financial escape plan in place are running out of time and willing lenders even after oil doubled from its February lows. Crude prices topping $50 a barrel helped to ease pressure on distressed energy companies, allowing at least 27 issuers to sell $16 billion of junk-rated bonds in last year’s final quarter, according to data compiled by Bloomberg. That still leaves about $44.5 billion maturing by the end of 2020, according to Fitch Ratings. A “mountain” of more than $18 billion in credit-line commitments comes due in 2019, said Spencer Cutter at Bloomberg Intelligence.”
Cloggie on Wed, 11th Jan 2017 12:07 pm
Sissyfuss says: “I would love to see a single world commune if it consisted of 500 mil humans and no more.”
You really are a (green) commie, no pejorative. You admit it yourself. You have no problem in mixing Africans, Europeans, Muslims, Hindus, Japanese, Chinese and what have you into one Arch of Noah, provided there is only 500 million of them. Environmentalist branch of Communism really.
Even the two flavors of globalism in the 20th century (USA & USSR) could only agree upon the destruction of Europe:
Pecking order swap:
1939: 1. Europe 2. USA 3. USSR
1945: 1. USA 2. USSR 3. Europe
WW2, #2 and #3 combining forces to advance a rung on the global ladder, at the cost of Europe, nothing else. Forget the liberation baloney.
https://upload.wikimedia.org/wikipedia/commons/3/3a/Jalta_1945.jpg
Invent the holo tale and German war guilt and as such create the moral patina for your actions and you’re good for a couple of decades. That setup is now coming to an end.
A few years after 1945 the estrangement between the USA and USSR began. Wonder why that was?
https://en.wikipedia.org/wiki/Stalin_and_antisemitism
Good old Joe didn’t fancy a globalist merger with the US too much and preferred his own national Bolshevism brand of globalism (although Joe knew in 1945 that he lost WW2 because he failed to reach the Atlantic coast before the US did, because the Germans preempted his attack by 2 weeks in June 1941) and keep the Americans at a distance.
Already starting from 1938 Stalin had quietly began to remove those folks from power in Russia, who until November 2016 held power in the US. Leon Trotsky (the darling of Wall street) represented best the link between US and Soviet globalism, but he was ice-picked by Stalin’s agents in Mexico.
William Bullitt, the kosher right-hand man of Roosevelt, and architect of WW2 in Europe, who had advocated the diplomatic recognition of the USSR at a time when human rights atrocities were worst there, after the war became furious with Stalin:
https://www.youtube.com/watch?v=oWakgLZOiZQ
Reason: the tribe had lost the USSR and the Cold War became a fact.
The tribe never seized being angry with Russia, apart from that Jeltzin decade, when the Tribe (aka oligarchs) could plunder Russia.
Then came Putin.
And now we have Trump.
Sorry Siss, but your commie dream won’t materialize.
I think I am going to have a good glass of wine with my dinner.
Sissyfuss on Wed, 11th Jan 2017 12:28 pm
I knew you were a drinker, FruitoftheClog. It is a symptom of your rambling retro prose. My dream of a half billion community of Man is possible after the reset takes place. The horrors that the survivors will have experienced will have taught them a true sense of humility, something that you and your tribe could never realize.
Davy on Wed, 11th Jan 2017 1:04 pm
Siss, that 1/2 billion number dovetails with what I see as sustainable human numbers post planetary destruction by modern man. How long it takes to get there I have no clue but that number appears reasonable as our natural carrying capacity. It is likely we will be huddled around a moving target of micro climates of rapidly changing landscapes. IOW we will be on the move to avoid extremes of cold and hot. We will be moving around in desperate search of what little food is available. I see this as similar to the ice age environments of pre-modern man.
Boat on Wed, 11th Jan 2017 2:04 pm
greggiet,
That is lousy thinking about investments. If the stock market delivers more dollars than a low interest costs why would you pay cash. Your losing money dude. It’s all paper anyway. The idea of debt free and that paper on your home meaning anything is 1950 thinking. The total of net assets is everything.
I did rent once for 4 years because it was after a move and interests rates were around 8 percent. I have paid cash for cars for the same reason. You just have to do the math.
GregT on Thu, 12th Jan 2017 1:34 am
Boat,
“That is lousy thinking about investments.”
Right. That’s why I’m retired, and you are not.
makati1 on Thu, 12th Jan 2017 2:07 am
Boat, not a clue, GregT. Not a clue.
GregT on Thu, 12th Jan 2017 2:21 am
None what-so-ever mak. As clueless as they come.