I like the web service OilPrice.com. I look at it every day because I find it is the most efficient source of real, honest data and good analysis about oil and natural gas markets on the web right now. I’ve even contributed a few stories there from time to time. Plus, my podcasting partner at The Energy Realities podcast, Irina Slav, writes there, and I hang on her every word.
I say all that mainly to hope you will all realize I’m not writing this to lampoon that site. I top the piece with the screen shot of its landing page as of about 9:45 a.m. CST on April 12 to illustrate a point: Predicting the direction of global oil prices is a really, really hard and dangerous thing to try to do.
Check out the headlines on that landing page at that time:
“Biden Administration’s SPR Plans Derailed by Oil Price Surge”
“Oil Fund Withdrawals Suggest Extended Price Rally”
“Oil Price Rally Has Stalled…For Now”
“Oil Prices Surge on Fears of Imminent Iranian Attack”
That’s 4 out of 5 headlines that discuss factors that impact the direction of oil prices, and that shot is only the top third of the landing page. There are many more such stories below that. Suffice it to say that the direction of oil prices is a constant topic of discussion, and that’s mainly because they have such an enormous impact on the global economy.
I often try to predict oil prices directionally in my own writing, and almost inevitably end up regretting it. In fact, in my annual energy predictions piece published each January at Forbes, I predicted the WTI price would not rise above $90/bbl at any time during 2024. Welp, it’s sitting there at $87.58 as I write this, so I have a feeling I’ll be having to publish a mea culpa on that one at the end of the year.
Then again, maybe not. Because really, who knows? If I really knew the answer to questions like that one, I’d be filthy, stinking rich and would not be sitting here writing a Substack piece on a beautiful Friday morning, now, would I?
Anyway, I don’t really have anything more profound than that to offer here. I just wanted to remind everyone this stuff is hard.
That is all.
Don’t worry, David. We often can’t predict the weather three days ahead. As for predictions of the future, you should keep those reports and studies near your toilet in case you run out of toilet paper.
Oil is such an inelastic commodity that very small changes in supply/demand balance (real or anticipated) move its price tremendously. For a globally traded commodity there are hundreds of inputs that can swing supply/demand by 0.5%. As such, its volatility makes predictions a fools errand.