Price of WTI Oil for 2016

It's been some time since I have posted, and several years since I dared to make a prediction regarding the price of oil.

My last forecast was for 2012, and I thought oil we be around $100.00 a barrel.  That prediction was a little high, but not by much.

Now that oil has dropped down to half of that,  I will go out on a limb and say that for 2016, the WTI Oil price will be around $60.00 a barrel.

It's been in the $50.00 range for most of 2015, and it really should hang around that or even lower, as no one seems to be halting production.    But, I just feel it in my bones that it's going to inch up a bit.

Now, as for predictions for the shipping industry for 2016,  I will have to put on my "thinking cap" for a bit.

Later.




 

Reporting the price of oil

The Financial Times has a great article about how the price of oil is determined.

However, after it became known the Libor interest rate was being manipulated by
the banks, now everyone is wondering if the same thing has been going on
with oil prices.

Apparently there is a a small organization called Platts (part of McGraw-Hill) which monitors bids

and offers for oil products.

click here for link to article
 

Rough Seas Ahead

Unfortunately 2012 will be a rough year again for shipping companies.

There is still too much tonnage coming on stream, and not enough being scrapped.

As previously stated, expect to see more VSA's (vessel sharing agreements), and
IF the carriers are smart they won't dramatically increase tonnage. I think Maersk
has had a change of heart with swearing they will maintain market share at all
costs, but who knows. They tend to flip-flop quite a lot.

And the price of oil will weigh heavily on the profits of companies. It's not easy
to get an increase in bunker surcharges when there is too much capacity.

The price of oil is coming down slightly, but I don't think we will see a big drop.
I continue to predict oil will be around $100.00 a barrel for 2012.

Oil Price History

In my predictions I said oil will be between $80 and $130 a barrel in 2012.

I disagree with Byron Wien, who predicts oil will drop to $85 a barrel in 2012. He missed his prediction for 2011 when he said oil would climb to $115 a barrel. Unless of course these predictions are based on a one time occurrence, and not a trend or average.

From Bloomberg News

Blackstone Group LP (BX)’s Byron Wien, whose prediction for the U.S. economy and stock market in 2011 proved too optimistic, said oil will slip to $85 a barrel this year and the Standard & Poor’s 500 Index will exceed 1,400.

Here is the oil history for WTI for the last 3 years.
click here for the source, which gives a much longer history.


2009-01-01 41.740
2009-02-01 39.160
2009-03-01 47.980
2009-04-01 49.790
2009-05-01 59.160
2009-06-01 69.680
2009-07-01 64.090
2009-08-01 71.060
2009-09-01 69.460
2009-10-01 75.820
2009-11-01 78.080
2009-12-01 74.300
2010-01-01 78.220
2010-02-01 76.420
2010-03-01 81.240
2010-04-01 84.480
2010-05-01 73.840
2010-06-01 75.350
2010-07-01 76.370
2010-08-01 76.820
2010-09-01 75.310
2010-10-01 81.900
2010-11-01 84.140
2010-12-01 89.040
2011-01-01 89.420
2011-02-01 89.580
2011-03-01 102.940
2011-04-01 110.040
2011-05-01 101.330
2011-06-01 96.290
2011-07-01 97.190
2011-08-01 86.330
2011-09-01 85.610
2011-10-01 86.410
2011-11-01 97.210
2011-12-01 98.570

Oil analysts predictions

I think I will declare myself to be an oil analyst. Surely, I can do as good of job as these folks.

In June I said oil would drop down to $55.00 a barrel by Oct., 2009, and possibly as soon as Aug. 2009.

This morning I read 2 different reports (actually 3, as Morgan Stanley has 2 different scenarios).

All of these from Bloomberg News

1) Morgan Stanley - headline reads "Morgan Stanley Raises 2010 Oil Forecast to $85"

Perhaps it was in the "updated 2" someone realized this was old news, or, I don't know what. Anyway, later in the article it says.

Crude may average $50 a barrel in the second half and $55 next year in a “bear” case scenario, and reach $90 a barrel in the second half of 2009 and $100 in 2010 if the global economy recovers rapidly, the report said.

So, somewhere between $50 and $100 a barrel. That certainly narrows it down.

click here for link

2) July 14 (Bloomberg) -- Crude oil in New York may fall below $45 a barrel by the end of August as the global recession stalls a recovery in fuel consumption in the U.S., the world’s biggest energy user, BNP Paribas said.

click here for link

There will be more forecasts tomorrow, as official reports giving usage and supply will be released today and tomorrow.

We shall wait and see.

My guess is it's going down.

Which means the bunker adjustment factors should be going down as well.

Actually, some of them should already be negative, based on the original assumptions of oil prices.