The Wild World Of Predicting Oil Prices

With oil prices ticking up national over the past two weeks, Bloomberg Business examines a range of predictions on oil prices for the rest of 2015 and beyond.

Oil prices yo-yoed this week, giving analysts whip lash as they hurried to decide what it all means, and forecast what the future holds. On Wednesday the price of a barrel had fallen to about $48, but by Thursday was back up to $52. And as quickly as some were to determine that prices were rallying, other chimed in to point out that it likely won’t last. While volatility has suddenly emerged in the oil marketplace (some are even saying that volatility could be the “new norm”), the factors impacted oil prices haven’t changed much since they began dropping months ago: Cutbacks in investments from large oil producers likely won’t affect output until mid-2015 and OPEC is still not cutting back its production — so many are predicting even when oil prices begin a steady climb, it won’t be a rapid ascent. But a few lessons have come from the roller coaster ride of the last few days. One trendy word in the conversation has become “Goldilocks” — aka that sweet spot where oil prices are juuuust right. Between anywhere from $60-$80 a barrel (depending on whom you ask) oil producers might still stand to make money, while consumers could still enjoy lower prices at the pump. Last month, some were saying that it would be at least a year before prices rebound. George Abed of the Institute of International Finance is now predicting that throughout 2015, prices will stay low, in the $50-$54 range. And once the drumbeat in cutbacks in shale production kick in around the end of the year, it could climb over $60. After that, he predicts it could be three to five years until they rebound to where they were a year ago. Will these latest predictions last? We'll see. Video by Bloomberg Business.

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