Forecast Update - August 2024
Forecast Update - August 2024
Update of Brent and WTI forecasts.
Dear subscribers,
At the beginning of each month, we will be sending you an email like this with an updated forecast of energy prices. Commodia brings together top academic economists who specialize in the analysis of global energy markets. The team has more than 20 years of experience from leading universities across the United States, Canada, Europe, and the Asia Pacific. Our forecasts are based on state-of-the-art forecasting techniques to predict energy commodity prices.
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🛢️Oil Market - July Summary
Oil prices rebounded in July 2024 after hitting six-month lows in June. Key Factors Influencing Oil Prices:
OPEC+ Production Cuts: The decision by OPEC+ to maintain production cuts until at least September supported oil prices.
Geopolitical Tensions: Ongoing geopolitical risks contributed to price increases.
Global Demand: While concerns about slowing Chinese economic growth and decelerating oil demand existed, overall demand remained relatively strong.
Inventory Levels: Global oil inventories rose for the fourth consecutive month in May, but this did not significantly impact prices in July.
🟧 Commodia - Forecast Update of Brent
📈 Comparison of Commodia Forecast vs. ICE Future Price
In August 2024, Commodia forecasts a price of $85.95 per barrel, which is higher than ICE's forward price of $82.44 per barrel. This represents a difference of approximately 4.25%.
Moving to November 2024, Commodia's forecast remains stable at $86 per barrel, while ICE's forward price is lower at $78.83 per barrel. The difference between the two increases to approximately 9.1%. By February 2024, Commodia anticipates a slight increase in the price to $86.81 per barrel, compared to ICE's forward price of $75.78 per barrel, resulting in a difference of around 14.6%.
In the medium term, by August 2025, Commodia forecasts a price of $88.06 per barrel, significantly higher than ICE's forward price of $73.91 per barrel. This represents a difference of approximately 19.2%. Finally, by August 2026, Commodia's forecast increases further to $91.13 per barrel, while ICE's forward price is $75.53 per barrel, resulting in a substantial difference of about 20.7%.
Overall, Commodia's forecasts for Brent crude oil prices are consistently higher than the forward prices indicated by ICE across all time horizons.
🟥 Commodia - Forecast Update of WTI
📈 Comparison of Commodia Forecast vs. NYMEX Future Price
In August 2024, Commodia forecasts a price of $82.31 per barrel, while the NYMEX future price is $75.29 per barrel. This results in a difference of approximately 9.3%. For November 2024, Commodia's forecast is $82.10 per barrel, compared to NYMEX's $72.55 per barrel, representing a difference of about 13.2%.
By February 2025, Commodia anticipates the price to be $83.25 per barrel, while NYMEX's future price stands at $71.11 per barrel, resulting in a difference of around 17.1%. Moving to August 2025, Commodia forecasts a price of $84.69 per barrel, significantly higher than NYMEX's $69.39 per barrel, representing a difference of approximately 22.0%. Finally, by August 2026, Commodia's forecast increases further to $87.54 per barrel, while the NYMEX future price is $67.05 per barrel, resulting in a substantial difference of about 30.6%.
Overall, Commodia's forecasts for WTI crude oil prices are consistently higher than the future prices indicated by NYMEX across all time horizons.
🗝 Key drivers of Commodia’s crude oil forecast from the previous month
The key variables of Commodia’s crude oil forecast (Brent and WTI) are Global Fuel Consumption, Global Economic Conditions and OECD Petroleum Inventories. There are no significant changes from our July forecast.
The main determinants of Global Economic Conditions are shown in the figure below:
Chart of Main Drivers of Global Economic Conditions from Christiane Baumeister & Dimitris Korobilis & Thomas K. Lee, 2022. "Energy Markets and Global Economic Conditions" The Review of Economics and Statistics, 104(4), 828-844.
The main determinants of Global Economic Conditions are shown in the figure above for the period January 2020 to August 2024.
For more details about the Global Economic Conditions index visit: https://sites.google.com/site/cjsbaumeister/research
References
International Energy Agency (IEA). (2024). Oil Market Report - May 2024.
U.S. Energy Information Administration (EIA). (2024). Short-Term Energy Outlook - May 2024.
BNN Bloomberg. (2024). Oil Markets Look ‘Reasonably Well Supplied’ in 2024.
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Commodia Team