Did Analysts Predict Oil Prices Right in 2019?

So far in 2019, WTI and Brent crude oil spot prices have averaged $56.9 per barrel and $64.3 per barrel, respectively. In December 2018, CNBC surveyed different Wall Street analysts. The survey suggested an average price forecast of $59.83 per barrel and $68.23 per barrel for WTI and Brent crude oil, respectively, in 2019.

Who was most optimistic about oil’s rise?

In 2018, JPMorgan Chase was the most optimistic about oil’s rise. JPMorgan Chase analysts forecasted a price of $72.6 per barrel and $66.4 per barrel for Brent and WTI crude oil in 2019. JPMorgan Chase had the highest price forecast in CNBC’s survey.

In November 2018, JPMorgan Chase reduced the 2019 Brent crude price forecast by $10.5 to $73 per barrel. JPMorgan cited oversupply concerns for the target price reduction. The US-China trade war is one of the crucial factors behind oil’s slide in 2019. Also, the IEA’s forecast of an oversupplied market in 2020 dragged oil futures.

Goldman Sachs (GS), UBS, and RBC Capital had a 2019 target price of $70, $68.5, and $68, respectively, for Brent crude oil per barrel. In April, RBC Capital increased its 2019 Brent crude oil price forecast to $75 per barrel. RBC’s strategist also said, “We see price risk asymmetrically skewed to the upside spurred by geopolitically infused rallies that could shoot prices toward or even beyond our high-end, bull-case scenario and test the $80/bbl mark for intermittent periods this summer.” Goldman Sachs increased its target price on Brent oil. Notably, the conflict in Libya helped oil futures move up.

Oversupply concerns dragged oil futures in the second half of 2019. Raymond James and Barclays forecasted $72 per barrel for Brent crude oil in 2019. In July, Barclays revised its 2019 Brent target price to $69 per barrel.

Who was cautious?

When CNBC reported the 2019 price survey in December 2018, Brent and WTI crude oil active futures were trading at $54.47 per barrel and $46.22 per barrel, respectively. Citi and the EIA were relatively cautious in their 2019 price forecast.

The EIA forecasted Brent crude oil at $61 per barrel in 2019, while Citi’s target price was at $60 per barrel. In December 2018, Citi’s strategists said in a note that “the more OPEC+ tries to support prices by withholding oil from the market, the more they give the US shale sector an out from rationing supply growth themselves.”

Citi’s strategists also said, “While two Presidents and a Crown Prince are behind policy drivers of oil prices in the near term, they can’t push market prices far from equilibrium price levels for too long.” Notably, President Trump is a long-time critic of any rise in energy prices. He also blamed OPEC for “artificially very high” oil prices.

In the EIA’s December 2018 STEO report, it estimated US crude oil output at 12.1 MMbpd (million barrels per day) for 2019. This year, US oil production averaged 12.3 MMbpd based on weekly data. On a year-over-year basis, the US oil output increased by around 1.5 MMbpd on average. Overall, the figure could explain Citi’s strategists’ fear and the EIA’s relatively low target price for oil. Read Key Oil Price Indicators at the End of 2019 to learn more.