In January 2004 the US EIA expected oil at $28 a barrel in 2005. The outcome: $57
Oil, $ a barrel (WTI), 2005 average
The forecast for 2005 moved with the price: $28 in January 2004, $43 in January 2005. The January forecast of the current year came within 5% of the outcome 9 times in 25.
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Every month the US Energy Information Administration (EIA) publishes its Short-Term Energy Outlook for this year and the next: the prices of oil, gas and gasoline. Here: the forecast of the annual average price.
Across: when each forecast came out. Blue: the forecast of the 2005 average price in each monthly issue (first a year ahead, then for the current year); orange: the outcome. The shading is the error.
- Forecast for 2005, January 2004
$28
- Forecast for 2005, July 2004
$37
- Forecast for 2005, January 2005
$43
- Forecast for 2005, July 2005
$55
- Forecast for 2005, September 2005
$59
- Outcome: 2005
$57
The price table of each monthly Short-Term Energy Outlook (24 issues with a forecast for 2005); outcome: EIA’s annual average price. The largest misses of a next-year forecast since 2001 (without the pandemic years 2020–2021), one per year, both directions: up to three for oil, one for gas. The January forecast of the current year (2001–2025): above the outcome 7 times, below 16.
The chart shows the forecast for the year moving with the price: it showed a sharp turn of the market once the turn was under way. The other largest misses go both ways: gas for 2023, the forecast 2.4 times above the outcome; oil for 2009, the forecast 2.1 times above the outcome; Brent oil for 2015, the forecast 2.0 times above the outcome.
A question for this picture
If a year-ahead price forecast moves with today’s price, what does it add to it?