Forecast Update - May 2023
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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🟧 Forecast Update of Brent
Commodia predicts that the spot price of Brent crude oil will increase to an average of $88.03 in May. We forecast an average value of $91.16 for August 2023 and $93.15 for November 2023. We expect an average price of $97.43 for May 2024 and $102.76 for May 2025.
📈 Comparison to ICE forecast
Our forecast is around 7.41% higher compared to the ICE Brent1 crude oil futures contract in May 2023. Our long-term forecast is about 22.76% higher one year ahead (May 2024) and 29.84% higher two years ahead (May 2025) compared to the ICE Brent crude oil futures contract.
🟥 Forecast Update of WTI
Commodia predicts that the spot price of WTI crude oil will increase to an average of $81.77 in May. We forecast an average value of $83.33 for August 2023 and $83.15 for November 2023. We expect an average price of $86.86 for May 2024 and $91.43 for May 2025.
📈 Comparison to NYMEX forecast
Our forecast is around 2.31% higher compared to the NYMEX WTI2 crude oil futures contract in May 2023. Our long-term forecast is about 9.73% higher one year ahead (May 2024) and 18.50% higher two years ahead (May 2025) compared to the NYMEX WTI crude oil futures contracts.
🗝 Key drivers
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 April to May 2023 are that Global Fuel Consumption and Global Economic Conditions have put upward pressure on crude oil prices, while changes in OECD Petroleum Inventories have put downward pressure on our 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.
For more details about the Global Economic Conditions index visit: https://sites.google.com/site/cjsbaumeister/research
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Commodia Team
www.commodia.com
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. Lineal interpolation is performed when ICE monthly observations are not available.
NYMEX: The data for NYMEX crude oil futures contract is from https://www.cmegroup.com. The data is downloaded and updated at the beginning of each month. Linear interpolation is performed when NYMEX monthly observations are not available.