2019 OIL PRICE FORECAST: WHO PREDICT BEST?
It’s that time of year when banks, brokers and analysts issue predictions for what the following 12 months will bring for financial markets.
The experts gain bragging rights if their forecasts play out perfectly, but predictions can also go spectacularly wrong in the world of finance.
Market experts made big predictions for 2019 — but did they get them right?. Let's look back at what some analysts said in late 2018 to see what was forecast for 2019 and whether, so far, they have been right.
Since January 1, 2019, West Texas Intermediate (WTI) crude has risen and fallen to end up around 29% higher at just under $59 per barrel by early December.
J.P. Morgan said there would be a moderate recovery in prices during the first half of 2019, thanks to OPEC and non-OPEC supply restrictions. In an accurate summary of oil’s 2019 performance so far, the bank said prices were then “expected to trend lower as global growth cools.”
Predictions for the average 2019 oil price for WTI included $59 per barrel from BofA Merrill Lynch, $49 from Citi and $54.19 from the U.S. Energy Information Administration (EIA).
As at December 11th, 2019′s WTI crude average price stood at $58.76, sitting roughly lower of most predictions and a couple of bucks higher than the latest call ($56.74) from the EIA.
The U.S. Energy Information Administration (EIA) predicts West Texas Intermediate (WTI) prices will average $55/b in 2020. EIA expects crude oil prices will be lower on average in 2020 than in 2019 because of forecast rising global oil inventories, particularly in the first half of next year.
Oil Price 2020 Outlook
Last week, Goldman Sachs raised its oil price forecasts for 2020, citing tighter-than-expected inventories after the Organization of the Petroleum Exporting Countries (OPEC) and its allies agreed to deepen oil output cuts through the first quarter of next year.
The bank revised its Brent spot price forecast to $63 per barrel for 2020, up from a previous estimate of $60, while it also increased West Texas Intermediate (WTI) spot price outlook to $58.5 per barrel from $55.5.
Daily Forecast - Technical Analysis
As Today, the WTI Crude Oil market rallied a bit during the trading session but continues to see a lot of resistance in the $60 region. This is the beginning of significant resistance extending to the $61.00 level, and therefore think it’s only a matter of time before exhaustion sets and we pullback. Underneath, I see a lot of support near the $58 level, and of course underneath there at the 200 day moving average (MA) and the 50 day MA which is getting ready to cross above it to form the “golden cross”. I think this is more or less a scenario where we start to buy on the dips, but only for short-term moves.
The catalyst for the jump in crude prices was a comment from U.S. President Trump that China and the U.S. were close to reaching a trade deal. The markets are expected to rally if a trade deal and/or a tariff delay is announced. Prices could break sharply if the U.S. decides to move forward with the new tariffs on Chinese imports.
Merry Christmas and Happy Investing in 2020!