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Julianne Geiger

Julianne Geiger

Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.

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The Most Outrageous 2020 Oil Predictions

Oil Prediction

As we approach the close of 2020, we’re reminded of one statistical certainty when it comes to oil price predictions. If you set anything other than a range, you will be proven wrong. And even for the forecasters and predictors that do set a range, the likelihood that the actual price will fall within the chosen range is about as sure as a range of prices selected by throwing a dart at a number on the wall. That has never stopped oil price forecasters from giving it a go.

We’ve rounded up some of our favorite oil price predictions from this year. And while you’re thinking that this might not be a fair exercise given the black swan event such as the coronavirus pandemic, we will remind you that the predictions made even in the middle of the pandemic were quite suspect. 

The U.S. Energy Information Administration (EIA) has the unfortunate position on our list of going first. Its January prediction for 2020 oil prices for both WTI and Brent would later prove to be high--not unsurprisingly given the events that were about to unfold. While there were reports that an outbreak was brewing as early as the first few days of January 2020, it wouldn’t be until January 13 that the first Covid-19 case was known to have escaped China’s borders. But when the EIA published its STEO on January 14, cratering oil demand due to the future pandemic wasn’t even on its radar. What was on its radar? Tensions between the United States and Iran, and the corresponding fear that there would be some oil supply disruption in the Middle East.

Its forecast for the price of an average WTI barrel throughout 2020 was $59.50 per barrel, while its Brent forecast was for $65 per barrel. This compares with an average Brent price of $64 in 2019. But Brent fell sharply in January, and on February 4, Brent closed the day at just $54 as the world already--pre-pandemic--feared a slack in oil demand.

For the next few months, the EIA adjusted its price predictions downward, but always chasing prices that had sunk lower the previous month.

While the EIA shot too high because it had no prior knowledge of Covid-19, Morgan Stanley perhaps shot too low. Morgan Stanley issued a Brent forecast in May at the height of the lockdowns that could best be described as safer-isn’t-always-better. Its Brent prediction, made near the end of May, was that Brent would trade at $40 per barrel by Christmas. Of course, Brent received a vaccine of its own when several vaccine candidates proved efficacious and limited rollouts were set to begin just weeks before Christmas. Then OPEC had discussions about not easing its production cuts as promised, injecting further optimism into the market. By December 3, the day that OPEC+ finally reached an agreement to ramp up production only slightly in January, Brent had reached $48.70 per barrel--22% over Morgan Stanley’s projections. 

ExxonMobil isn’t your traditional market analyst, but it has certainly has more skin in the game than most analysts. In late November, which can hardly be considered a 2020 price forecast, the U.S. supermajor lowered its oil price expectations through 2025 to between $50 and $55 per barrel. Exxon’s oil price forecasts are considered proprietary, so this rare glimpse (courtesy of the WSJ) into what it feels will be the next five years of oil prices should not be dismissed. Exxon’s 2025 forecast for Brent was $62.

Related: Oil Jumps On Significant Crude Inventory Draw

Speaking of safe, there’s safety in numbers. Just two weeks after the EIA published its 2020 oil price predictions back in January, Reuters conducted a poll of 50 economists and analysts. But just because there were more of them doesn’t mean they were any more right. In fact, this forecast, which pegged the average price of Brent in 2020 at $63.48, serves to highlight just how wrong everyone was. An April poll mid-lockdown by Reuters sang a much different tune, expecting Brent to average just $35.84 per barrel. 

Goldman Sachs made a sharp downward cut to its oil price Q2 forecast near the end of March--in fact, it was the second downward adjustment in just a few short weeks as the pandemic took its toll on the oil markets. For the second quarter, Goldman estimated that Brent would average $20 per barrel. While April’s average ended being up sub $20, but May’s average Brent price came in just shy of $30 per barrel, and by June, prices had recovered to $40.

By June, while Brent was trading near $40, optimism was starting to return to the market. As a result, Bank of America (BofA) in June adjusted upward its forecast for a Brent barrel over 2020, to $43.70 (up from its previous estimate of $37). While BofA ended up being closer than many (which is to be expected with nearly half the year being placed into the Known category), BofA will likely end being about $10 too low. When it made the forecast, of course, vaccine candidate optimism was not yet present in the market. What also BofA couldn’t have predicted was the market’s sentimentality over this optimism and the complete and very atypical disregard for what would be booming crude inventories in the United States. 

Fast forward into September, when many of the lockdowns around the globe had subsided. Barclays Commodities Research raised its forecast for Brent for 2020--with three months left to the year--to $43 per barrel, citing limited potential downside to its demand outlook on “continued OPEC+ restraint” after the cartel moved to hold members responsible for not meeting their production cut quotas, and “the evolving response function of governments as well as the general public towards the virus threat.” Brent was trading at almost $43 at the time of the forecast increase.


No matter where the forecasts seemed to land, no prognosticator got it right this year, unless of course, they made projections in the last month or so of the year. Those January forecasts--even by the agendaless best of the best--goes to show just how volatile the oil market has become and may serve to widen the forecast ranges that we see offered for 2021 and beyond. 

By Julianne Geiger for Oilprice.com

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