Oil forecasts became false

Analysts proposed that prices on oil market would turn this year. According to the WSJ survey released in March, oil price would be 50 dollars a barrel in Q4. Nearly a year ago barrel of oil on futures contract ended December 2015 cost 63.82 dollars.

This shows that oil prices demonstrate the longest lowering in history, and the “bottom” is too far yet. For example, US oil WTI could not fix above 50 dollars for some months. Analysts revise their forecast for the next year down and oil industry is waiting for another hard year.

What is the secret of false forecasts? Perhaps, and this may be the only true version, a lot of people have forget the main market’s postulate – “market is more than our expectations”. However, in this case it was no taken into account that fall of prices due to oversupply of offer, may last any time.

In 2009 prices have also fallen but due to reduction of demand.  Besides, market has recovered its position in some months. Current crisis may last for years.

The US oil output was reduced in some point in mid-spring this year, but still remains to be at historical maximum. At the given moment the tendency shows that futures oil price will be 45 dollars a barrel next year. The US Department of Energy has already lowered its forecast for 2016 by 20.11dollars to 50.9 dollars. Looking at the history, it can be seen a strong contrast with previous figures. Experts expected oil market to recover in 2015 due to reduction of spending in the US and growth of demand.

Citigroup forecasts oil prices at 48 dollars a barrel in 2015 and 2016. Brent oil is forecasted to be 53 dollars a barrel in 2015 and 51 dollars a barrel in 2016. Bank of America Merrill Lynch sticks to negative outlooks concerning oil prices.

There are also optimistic analysts, who see stabilisation of oil market in 2016 and turn of downward trend. These forecasts correspond to the same forecast in late-2014, which became false. When prices fixed above 60 dollars in summer 2015, some producers increased their intraday output. The result of this can be seen now.