In January, I posted my forecast for Oil futures in the US. A copy of that report is here.
The below chart shows how posted price of West Texas Intermediate compares to the forecast price.
| Average price West Texas Intermediate (WTI) | Low Range Average | High Range Average | Mid Range Average | Actual |
| Q1 2015 | $36.47 | $56.47 | $47.47 | $48.48 |
| Q2 2015 | $38.01 | $58.01 | $48.84 | $57.85 |
| Q3 2015 | $40.38 | $60.38 | $51.00 | $46.49 |
| Q4 2015 | $42.28 | $62.31 | $52.83 |
The Mid Range forecast for the first 3 quarters of 2015 averaged $49.10. Actual price of WTI over that time period (averaging months and not averaging daily) computes $50.94. The 2nd Quarter came in high to prediction, but within range and the 3rd quarter came in low to prediction, but within range. My YTD error from Mid Range Prediction to WTI actual was 3.7%.
I see no reason to drastically alter my pricing forecast for the Q4 2015.
A strong item to look at is the asinine deal that was made with Iran. Now, Iran will have free market access for their hydrocarbons and U.S. producers will not have free market access. That makes no sense to me. Good thing that I am not Secretary of State, because I clearly do not understand things.
It is premature for me to speculate on 2016, but if I were, here is what makes sense to me:
1. OPEC will create an artificial price for their product in the trading band of $65.00 - $75.00 per bbl.
2. US producers will continue to idle exploration rigs.
3. US producers will spend free cash on re-working and re-completing existing wells. That is, in many cases, the best ROI that they can enjoy.
4. The bloodletting is gone now from the domestic industry. Most of the people who have lost their jobs will be moving on to another industry.
The almost unthinkable is that the USD will not be the petrodollar. I do not suspect that to be the case in 2016, but I will never say never. The USD at some point will lose favor as a safe haven currency if we keep adding to the national debt.
Buddy Cotten