Oil’s Murky Math

Where are we headed: Up to $200 a barrel? Down to $80? With little good data on supply or demand, oil’s next price move is anyone’s guess

At around $125 a barrel, crude oil has more than doubled in price since the end of 2006. How is it possible that the vast majority of government forecasters, stock analysts, economists, traders, and journalists who follow the oil market failed to foresee this? Moreover, how can it be that even today, the bulls and bears on oil are extremely far apart, disagreeing not only on the oil outlook but even the present situation?

The answer is simple. You can’t predict what oil prices are going to do even in the short-to-medium term unless you have a good handle on the forces of supply and demand. And that requires thorough and reliable data


Contradictory Predictions

The scarcity of good global data is a key reason why it’s impossible to know for sure whether the next “super-spike” in oil in the coming three or four years will be up to $200 or more