On this entry with many sources, we will concentrate on oil price estimates for 2020 to 2035. We will also look back on previous wrong estimates.
For our page on shale oil and oil sands production, break-even and transport costs click here.
For our page on global and emerging markets demand click here.
Oil prices are strongly related to U.S. booms and recessions
Oil price estimates for 2020 in a wide range between $70 and $160
October 30, 2013
Oil price estimates for 2020 by so-called “experts” are in a wide range between $70 and $160, the average $20 lower than in 2012 in real terms.
2020 Brent median of $95, $80 in real terms
— Bulls: shale not enough to meet demand growth
— Lowest 2020 poll forecast $70, highest $160
According to the median estimate of the poll, Brent crude will average $95 a barrel over the course of 2020, a drop of $20 from the estimate in a similar survey a year ago, even though spot oil prices have changed little since then.
Soozhana Choi, head of energy research at Deutsche Bank, pointed out that in July 2011 the U.S. Department of Energy forecast 2012 U.S. oil production growth of 30,000 barrels per day (bpd), whilst the International Energy Agency predicted U.S. supply growth of 50,000 bpd. Growth came in at 1 million bpd.
Jessop was the biggest bear in the group, sticking with his 2012 forecast of $70 a barrel for 2020. The other bears fell into the $85-$95 range.
But several respected analysts said fresh supplies from shale would not be enough to meet the growth in demand, meaning prices would need to rise.
Bernstein Research was the most bullish, forecasting $160 a barrel for 2020.
U.S. should overtake Saudis in oil production
The International Energy Agency (IEA) said
the U.S. need for oil imports from the Middle East will fall to almost zero in the next 10 years, while almost 90% of Middle Eastern oil exports will go to Asia by 2035, creating a new trade axis. The IEA hinted that U.S. energy independence could redefine military alliances, with Asian nations replacing the U.S. in securing oil shipping lanes from the Persian Gulf. (source)
Will the International Energy Agency’s oil forecast be wrong again?
Back in the year 2000, the IEA divined that by 2010, liquid fuel production worldwide would reach 95.8 million barrels per day (mbpd). The actual 2010 number was 87.1 mbpd
(The IEA included in its 2000 supply projections not only crude oil plus lease condensate, which is the definition of oil, but also natural gas plant liquids–only a small fraction of which can be substituted for oil–and refinery processing gain which is the result of applying energy to break oil into its components, causing the final volume to expand.)
So, what made the IEA so sanguine about oil supply growth in the year 2000? It cited the revolution taking place in deepwater drilling technology which was expected to allow the extraction of oil supplies ample for the world’s needs for decades to come. But, deepwater drilling has turned out to be more challenging than anticipated and has not produced the bounty the IEA imagined it would.
Shale Effect on Oil Supply Is Forecast to End in 2020
“There is a huge growth in light tight oil, that it will peak around 2020, and then it will plateau,” said Maria van der Hoeven, executive director of the International Energy Agency. (source)
Renewable energies to grow
The International Energy Agency report projects that by 2035, renewable energy will make up 18 percent of energy supplies, up from 13 percent in 2011. (source)
Disclaimer: The opinions expressed above are not intended to be taken as investment advice. It is to be taken as opinion only and we encourage you to complete your own due diligence when making an investment decision. Even if we often write about Forex trading, our advices aren't written for day traders who follow technical channels, but rather for mid- and long-term investors. Our aim is to show discrepancies between fundamental data and current asset valuations, which can lead in mid-term to an inversion to technical channels.