Forecast Update - December 2023
Update of Brent and WTI forecasts.
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.
Learn more about the Commodia team:👤 About us
And about our econometric model: 📑 Econometric model
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🟧 Forecast Update of Brent
Commodia predicts that the spot price of Brent crude oil will be an average of $82.35 in December 2023. We forecast an average value of $83.50 for March 2024 and $85.29 for June 2024. We expect an average price of $89.27 for December 2024 and $95.10 for December 2025.
📈 Comparison to ICE forecast
Our forecast is around 2% higher compared to the ICE Brent1 crude oil futures contract in December 2023. Our long-term forecast is about 16% higher one year ahead (December 2024) and 29% higher two years ahead (December 2025) compared to the ICE Brent crude oil futures contracts.
🟥 Forecast Update of WTI
Commodia predicts that the spot price of WTI crude oil will be an average of $76.81 in December. We forecast an average value of $78.41 for March 2024 and $80.44 for June 2024. We expect an average price of $82.04 for December 2024 and $87.53 for December 2025.
📈 Comparison to NYMEX forecast
Our forecast is 3.4% lower compared to the NYMEX WTI2 crude oil futures contract in December 2023. Our long-term forecast is about 14% higher one year ahead (December 2024) and 28% higher two years ahead (December 2025) compared to the NYMEX WTI crude oil futures contracts.
🗝 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. The main changes to our forecast from November to December 2023 are that Global Economic Conditions have put downward pressure on crude oil prices.
This has implied that the long-term forecasts for oil prices have been revised downward (6.1 percent for Brent, and 6.7 percent for WTI two years ahead).
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 Jan 2020 to November 2023.
For more details about the Global Economic Conditions index visit: https://sites.google.com/site/cjsbaumeister/research
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ICE: The data for ICE Brent crude oil futures contract is from https://www.theice.com. The data is downloaded and updated at the beginning of each month. Linear interpolation is performed when ICE monthly observations are not available.