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Oil Update - February 2018

Kevin Stecyk profile picture
Kevin Stecyk

Last month, I stated that I expected that West Texas Intermediate oil prices would be bound between $60 and $67.50 for the next few weeks. With a brief exception, WTI prices have been stayed within that range. I am reiterating that same expectation for the next few weeks because nothing has changed.

The ongoing geopolitical uncertainties remain. And the ongoing debate whether the increase in shale oil production will cause oil prices to recede again has yet to be resolved. Many believe that increasing demand is too great for shale to overcome, while others believe that current high prices will encourage too much production.

Wednesday's Wall Street Journal article "Forecasts for Oil Prices Rise for Fifth-Straight Month" states that investment banks have raised their price forecasts yet again (subscription might be required).

LONDON - Banks raised their forecasts for oil prices for the fifth month in a row in February, signaling continued confidence that prices will continue to recover as the global supply glut drains due to production cuts.

Brent crude - the global benchmark - is now expected to average $62 a barrel this year, while West Texas Intermediate, the U.S. standard, should average $58 a barrel, according to a poll of 15 investment banks surveyed by The Wall Street Journal toward the end of February. Both predictions are up roughly $1 from the January survey.

Even investment banks are having a difficult time trying to forecast oil prices.

On an investment site, one person commented that my forecasts were effectively useless because they stated the obvious. It was almost as though I was saying that there will be snow in Calgary in March and it will be warm in Florida. There's a certain amount of truth to this commenter's complaint. The range is reasonably wide, and the forecasts do tend to mirror the latest

This article was written by

Kevin Stecyk profile picture
Kevin H. Stecyk has a mechanical engineering degree from the University of Alberta, an MBA from Queen's University in Kingston, Ontario, and a CFA designation. He spent the earlier part of his career working for Syncrude Canada Limited, an oil sands company in Fort McMurray, Alberta. After Syncrude, he worked for Suncor Energy Inc. in its conventional natural gas division. For the past several years, Kevin has been an independent consultant. Kevin's financial and business articles are not focused on any one area, but rather whatever industry or company currently interests him. Visit his site: Specious Argument (http://www.speciousargument.com/blog/)

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Comments (1)

Fluidsdoc profile picture
Kevin, thanks for the report. Cheers!
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