Confused on Oil Price Forecasts?

Are you as confused as I am over the “Experts” forecasting on Oil Prices? First off, you have to decide what an ‘Expert’ is, and then, try to muddle through all the ‘Breaking News’ stories claiming Oil Prices will Surge, or Oil Prices will Collapse….you can usually find dozens of ‘expert’ news stories on either side, all in the same day!

My take: Just stick with the basics.

1.)   Supply and Demand, both can be, and usually are manipulated numbers, but the basic numbers are there, Supplies are tight, and Demand continues to grow.

2.)   Geopolitical Tensions! There are so many political issues from the globe affecting oil prices, most are hyped-up and short lived, most are promoted from those trying to capitalize on the story of the day. However, there are some serious Geopolitical issues that are having an impact on oil prices, and could so for the foreseeable future, Iran as one example, and the failed State of Venezuela as another.

3.)   Follow the Money! Or, rather over-investment and under-investment in Key regions for oil production. Everyone has seen the major investments in the Permian with fracking. My opinion is, that this could be another North Dakota, too fast, too much, with not enough return on investment….we ‘shale’ see. It always seems to be too much investment, or too little, with the end game either being over-supply or supply shortages. Shale initial production figures are always strong, and mostly followed by disappointing actual production figures.

Final thoughts! Just stick to the basics, try to filter out all the jibber-jabber on Oil Surging or Oil Collapsing. The market appears to be in stable condition with tight supplies, growing demand, with some concerns on investments in production, and a few geopolitical issues that could, ‘could’ have an impact, albeit a short term one on the industry. I’m not an expert, I’m a realist with my own money in this industry of ours, and with that, I try not to get caught up in all the news hype of the day, just the basics. The basics tell me that Oil prices should stay in the $70 range for the remainder of the year with the possibility of $80 Oil next year. Looking beyond that makes my brain hurt!

Opinion by Jim Harvey/CEO Petrorigs.com