Forecast Update - September 2024
Forecast Update - September 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 - August Summary
In August 2024, oil prices exhibited significant volatility, driven by geopolitical tensions, supply concerns, and fluctuating demand forecasts. This rise was largely influenced by production cuts from OPEC+ nations, particularly Saudi Arabia and Russia, who maintained reduced output to stabilize the market.
On the demand side, concerns about a potential global economic slowdown weighed on oil prices. Weaker-than-expected economic data from China, one of the world’s largest oil consumers, contributed to dampened demand projections. However, easing inflation in key economies like the U.S. and Europe provided some optimism for future oil consumption.
🟧 Commodia - Forecast Update of Brent
📈 Comparison of Commodia Forecast vs. ICE Future Price
Brent crude oil, as of September 2024, Commodia predicts Brent price of $78.77 per barrel, which is approximately 4.9% higher than ICE's forward price of $75.05 per barrel. By December 2024, Commodia anticipates the price to be $78.52 per barrel, which is about 3.0% higher than ICE's forward price of $76.24 per barrel.
Moving into March 2025, Commodia's forecast of $80.18 per barrel is 6.7% higher than ICE's forward price of $75.13 per barrel. By September 2025, the gap widens further, with Commodia forecasting $81.94 per barrel, which is 11.1% higher than ICE's forward price of $73.76 per barrel.
Looking further ahead to September 2026, Commodia projects a notable increase to $85.66 per barrel, which is 19.7% higher than ICE's forward price of $71.55 per barrel.
In summary, Commodia's forecasts are consistently higher than ICE's forward prices, with the percentage difference increasing over time.
🟥 Commodia - Forecast Update of WTI
📈 Comparison of Commodia Forecast vs. NYMEX Future Price
For September 2024, Commodia predicts a WTI price of $76.08 per barrel, which is approximately 3.4% higher than NYMEX's forward price of $73.55 per barrel. By December 2024, Commodia anticipates the price to be $77.14 per barrel, which is 8.1% higher than NYMEX's forward price of $71.36 per barrel.
Moving into March 2025, Commodia's forecast of $78.38 per barrel is 11.9% higher than NYMEX's forward price of $70.04 per barrel. By September 2025, Commodia's forecast rises to $80.55 per barrel, which is 16.8% higher than NYMEX's forward price of $68.92 per barrel.
Looking further ahead to September 2026, Commodia projects a price of $84.53 per barrel, which is 26.9% higher than NYMEX's forward price of $66.60 per barrel.
In summary, Commodia's forecasts are consistently higher than NYMEX's forward prices, with the percentage difference growing larger over time.
🗝 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. OECD Petroleum Inventories increase, putting downward pressure on oil prices. The two-year ahead forecasts from Commodia show a decrease of around 5.9% for Brent and around 3.8% for WTI.
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 September 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