Our Magic Oil Price Forecast – An Update


Given the various ups and downs in the oil market recently, I thought it was about time I updated our magic forecast from last January. For those of you who haven’t read my original post, I few years ago I made a “magic” oil price forecast in order to highlight the some typical problems the crop up again and again in many forecasts and price predictions (and especially those we see in the media). I chose oil because it is a particularly egregious example… and I made a “magic” forecast from fitting a sine curve to historical oil prices for no other reason than it seemed like a good idea at the time (and the prices looked sort of sine-curvey if you squinted a bit). The idea was then to see how this pretty rubbish forecast compared to those from the professional oil analysts that populate our banks and finance houses…

Somewhat to my surprise, the Optimeering’s magic sine curve has, um, done rather well. And much better than the expert analyst predictions. So here is an update – with historical prices converted to 2015 USD, and the latest prices added and compared to the model. Bad news, oil people and Norway, the bottom has not been reached – well, at least it hasn’t if you believe in magic (oil price forecasts) anyway…

updated forecast Jan 2016

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