May 18, 2012

Is it easy to forecast oil production and pricing?

No, it's very, very difficult.

Here's an example.

"Bloomberg’s survey of oil analysts and traders, conducted each Thursday, asks for an assessment of whether crude oil futures are likely to rise, fall or remain neutral in the coming week.

...The oil survey has correctly predicted the direction of futures 49 percent of the time since its start in April 2004. "

That means that we could achieve better accuracy by flipping a coin!


Paul said...

Not quite? There are three possibilities - up, down, and steady - not two.

Nick G said...

Very true.

There are 34 analysts & traders, so they wouldn't have an even split (or all choose neutral) very often, but it's true that there is a third choice.

So, maybe they do as well as a coin toss after all...