Short-Term World Oil Price Forecast

West Texas Intermediate (WTI)

Sources: History: EIA; Projections: Short-Term Energy Outlook, August 2001.

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Notes:

This graph shows monthly average spot West Texas Intermediate crude oil prices. Spot WTI crude oil prices peaked last fall as anticipated boosts to world supply from OPEC and other sources did not show up in actual stocks data.

So where do we see crude oil prices going from here?

Crude oil prices are expected to be about $28-$30 per barrel for the rest of this year, but note the uncertainty bands on this projection. They give an indication of how difficult it is to know what these prices are going to do.

Also, EIA does not forecast volatility. This relatively flat forecast could be correct on average, with wide swings around the base line.

Let’s explore why we think prices will likely remain high, by looking at an important market barometer – inventories – which measures the pressures between demand and supply, and thus price pressure.