Can anyone accurately predict the long-term outlook for crude oil prices? Is there a definitive method to determine which direction the commodity will sway over the next few years? The short answer is no, not reliably at least. There is no analyst or commentator who can unequivocally figure the long-term price of oil. For each forecast that states a $100 per barrel high, there's another to postulate a low of $40.
Nevertheless, crude oil was and is a very important tradable energy commodity and understanding it bias, direction, and the important support and resistance levels is crucial for energy traders. At its core, the price of crude oil, a commodity, is most importantly driven by supply and demand. But, it is not that simple. The price of crude oil is influenced greatly by several unpredictable past/present/future events like weather, stock levels, GDP growth, geopolitical aspects and people’s expectations or sentiment. All these factors create a strongly fluctuating market and why accurately predicting the long-term price for crude oil is nearly impossible. However, when it comes to forecasting the price of crude oil in the short-term, over the next few days, weeks, and in some cases, even months is achievable using quantitative factors such as technical analysis.
Quantitative Methods to Forecast Oil Price
Generally, market technicians and energy commodities analysts are the professionals who make short-and medium-term predictions on the crude oil market. These experts use mathematical, statistical, and technical models, which either focus on financials (using spot and future prices), or supply and demand factors - quantifying variables and testing their explanatory power.
Spot and future price models are still popular with the technicians and statisticians to make a realistic energy price forecast. The main idea is that futures markets, especially the relation between futures price fluctuations and spot price fluctuations, will indicate the direction of tomorrow's crude oil prices.
Once could also use supply and demand models that emphasize macroeconomic variables such as OPEC production, income elasticity of demand for oil, and real gross domestic product (GDP). However, since there are so many and varied possible combination of variables it is challenging to know what factors are most important and at what time those factors are having the most effect on the price of oil.
Technical analysis is one of the best ways to forecast oil prices over the short-term. The idea behind technical analysis is that everything is discounted in price. Therefore, a technical analyst does not necessarily have to worry about what geopolitical, supply demand, or other macroeconomic factors are driving price. Rather, the technical analyst can use chart patterns, indicators, and mathematical models to determine the future direction and price targets, potential turning points, and optimal trade entry and exit points.
Kase Crude Oil Commentary – Technical Analysis Forecast
Nevertheless, crude oil was and is a very important tradable energy commodity and understanding it bias, direction, and the important support and resistance levels is crucial for energy traders. At its core, the price of crude oil, a commodity, is most importantly driven by supply and demand. But, it is not that simple. The price of crude oil is influenced greatly by several unpredictable past/present/future events like weather, stock levels, GDP growth, geopolitical aspects and people’s expectations or sentiment. All these factors create a strongly fluctuating market and why accurately predicting the long-term price for crude oil is nearly impossible. However, when it comes to forecasting the price of crude oil in the short-term, over the next few days, weeks, and in some cases, even months is achievable using quantitative factors such as technical analysis.
Quantitative Methods to Forecast Oil Price
Generally, market technicians and energy commodities analysts are the professionals who make short-and medium-term predictions on the crude oil market. These experts use mathematical, statistical, and technical models, which either focus on financials (using spot and future prices), or supply and demand factors - quantifying variables and testing their explanatory power.
Spot and future price models are still popular with the technicians and statisticians to make a realistic energy price forecast. The main idea is that futures markets, especially the relation between futures price fluctuations and spot price fluctuations, will indicate the direction of tomorrow's crude oil prices.
Once could also use supply and demand models that emphasize macroeconomic variables such as OPEC production, income elasticity of demand for oil, and real gross domestic product (GDP). However, since there are so many and varied possible combination of variables it is challenging to know what factors are most important and at what time those factors are having the most effect on the price of oil.
Technical analysis is one of the best ways to forecast oil prices over the short-term. The idea behind technical analysis is that everything is discounted in price. Therefore, a technical analyst does not necessarily have to worry about what geopolitical, supply demand, or other macroeconomic factors are driving price. Rather, the technical analyst can use chart patterns, indicators, and mathematical models to determine the future direction and price targets, potential turning points, and optimal trade entry and exit points.
Kase Crude Oil Commentary – Technical Analysis Forecast
One such service that utilizes
technical analysis to forecast the future price of crude oil is the Kase
Commentary on Crude Oil. For over 25 years Kase has provided clients with
in-depth and highly accurate weekly prices forecasts and daily updates. The
analysis is purely technical and balanced against underlying fundamental and
geopolitical pressures on prices. It is a short-term forecast that focuses on
the next few weeks and outlines the impacts of the
longer-term outlook.If you are interested in a complimentary four-week trial,
please visit http://www.kaseco.com/energy-price-forecasts/.
