Survey of Analysts Shows No Consensus on Oil Prices
The future of oil prices in 2010 is anything but clear. (image: stupidsvannah.vox.com)
In January, we took a look at the two schools of thought on crude oil prices in 2010: the first stated that the price of crude will stay flat, hovering around $80 per barrel, and the second predicted that crude’s rise to the $80 mark was a fluke and that prices would decline significantly as the year wore on.
Two months later, it seems that not much has changed. Bloomberg reported on Friday that a survey of 40 oil market analysts turned up 15 who believed the price will increase this year, 15 who said it would decrease, and 10 who said it would stay the same. As of this writing, the price of crude oil had last closed at $81.85 a barrel on the New York Mercantile Exchange.
Uncertainty about the direction of oil prices can be traced primarily to the unpredictable state of the American economy. While it seems that the worst of the recession has passed, mixed news on the nation’s overall economic health continues to confound economists and other analysts. Without a clear picture of when or how fast the US economy will get back up to speed, analysts and traders are unable to predict when crude oil demand will surge and set prices on a steady climb.
Bloomberg quoted one analyst who summarized the current oil-trading climate:
“You never know what direction the market is going to move on any given day, because of the very mixed signals on the economy,” said Peter Beutel, president of trading adviser Cameron Hanover Inc. in New Canaan, Connecticut. “There is plenty of supply on hand. We are seeing better demand, but I wouldn’t call the growth brisk.”
The supply that Beutel alludes to are the 341.6 million barrels of crude in US storage last week, “the highest level since August and 5.7 percent above the five-year average for the week, according to an Energy Department report on March 3,” Bloomberg cited. That extra supply of crude will help dull the price impact of any sudden upswing in demand, but also represent sluggishness in US demand that has dogged oil prices since the recession began.
Excess supply and weak demand would usually lead one to expect lower prices, but the last year has seen a steady rise in crude prices despite these factors, making the near future of oil prices that much harder to predict.
When even the experts can’t agree on oil prices, it’s anyone’s guess where the prices of heating oil, gasoline, and other consumer petroleum products will go this year. If you’re planning out this year’s fuel budget now, you’ll unfortunately have to plan for unpredictability.
