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Crude Oil Price Forecast: Short-Term and Long-Term Predictions


10 October 2022

Over the years, crude oil has often been compared to gold, with some even referring to it as black gold due to its secure financial position. However, this changed a couple of years ago, with crude oil's stability being completely undermined. This oil price forecast will look at the history of crude oil, factors that have affected its price and price predictions from experts. 

What Is Crude Oil?

Crude oil is a fuel source in liquid form that can be found underground and extracted by drilling. Oil has many uses, including plastic and petroleum production, transportation, heat and electricity generation. Because of oil's origins, it's considered a "fossil fuel". Simply put, crude oil was created hundreds of millions of years ago when plankton and prehistoric algae settled at the bottom of the ocean. The organic matter was covered with mud and layers upon layers of sediment; the resulting pressure heated the remains. For millions of years, the matter formed kerogen (a waxy substance), and after even more heat and pressure, it transformed into liquid oil.

Crude oil is a nonrenewable resource. When the world's current oil supply is used up, it'll take millions of years to create more oil.

A Closer Look at Crude Oil Usage

Crude oil has many uses. It's the base for gasoline, jet and diesel fuels. Furthermore, crude oil is the base for petroleum products, including paraffin wax, tar, asphalt and lubricating oils. Oil's use can even stretch as far as perfume, fertiliser, soap, vitamin capsules and insecticides. While pretty much every country depends on oil, only a handful produce it. The top 5 countries that have the most oil are the US (17.9%), Saudi Arabia (12.4%), Russia (12.1)%, Canada (5.9%) and Iraq (5%).

Global oil consumption has risen steadily year to year over the last three decades. The only decline was during the financial crisis of 2008 and the COVID-19 crisis of 2020.

Crude Oil Types

There are two main types of crude oil: Brent and West Texas Intermediate (WTI). 

4 Factors Influencing Oil Price

Due to unexpected changes to the factors that affect oil prices, this commodity has become highly volatile. Later, we'll take a look at how exactly crude oil's price performed in 2020, but first, we'll introduce four key factors that have had a significant impact on this black gold.

So, how does this affect oil? All oil transactions are made in USD, and most oil-exporting countries maintain their currency's value at a fixed exchange rate to USD. As such, a 25% rise in the dollar's value comes along with a 25% decline in oil prices.

Crude Oil Price Performance in the Past 

Over the last decade, the price of crude oil has been especially volatile. Crude oil is one of the most scrutinised commodity prices; its cost influences all stages of production and, therefore, alters the price of end-products, as well. Why has crude oil been so volatile? Oil's inherent inelasticity in regards to short-term changes in supply and demand means that its prices are naturally erratic. What's more, the economic growth in BRIC countries (like India and China) and the use of horizontal drilling and hydraulic fracturing in the US have caused further changes to supply and demand, thus contributing to the heightened price volatility since 2009.

Some historical world market oil events reflected in the chart include: 

How Was Oil Doing in 2020-2021? What's Happened to Oil Prices in 2022 (So Far)?

Crude oil had a terrible year in 2020, and we don't say that lightly. The US's assassination of Iran's most powerful military commander, Qasem Soleimani, on 3 January 2020 led to heightened global tensions. Add COVID-19 to the mix, as well as the Saudi-Russia oil price situation, and it's not surprising that oil's price shot down. What nobody was expecting, however, was for the price to reach -$37.63. This occurred on 20 April 2020, plunging crude oil's price to negative prices for the first time in history. 

As the commodity plummeted amidst immense oversupply and a drop in demand, investors fled. Since then, however, crude oil has managed to recover its losses and reach price levels of late 2019. 

So far, in 2022, the price of oil has been on a wild ride. The new financial sanctions and exodus of western companies, which used to meet 5% of global crude demand and 10% of the refined products export market, deepened fears over oil supplies. Between 25 February and 3 March, oil prices rose from $97.93 to $127.98 a barrel. Another big swing happened between 16 and 23 March, when prices went from $98.02 to $121.60. Up until the beginning of August, the price was moving in an uptrend, albeit a rocky one. Starting from 6 August ($122.11), oil has been in a steep downtrend. The closing price on 16 September was $85.29.

Crude Oil Price Forecast for 2022-2024

Wallet Investor has published Brent crude oil predictions for 2022-2024. After 2024, however, month-to-month predictions are too speculative to provide, so we'll give more general insights for later years.

Month

Opening price ($)

Closing price ($)

Minimum price ($)

Maximum price ($)

Change

October 2022

87.91

86.60

86.60

88.17

-1.51%

November 2022

86.57

84.89

84.89

86.65

-1.98%

December 2022

84.91

85.81

84.19

85.87

1.06%

Summary: Brent crude oil is anticipated to enter October between $86.60 and $88.17. It may end 2022 between $84.19 and $85.87. Source: WalletInvestor

Month

Opening price ($)

Closing price ($)

Minimum price ($)

Maximum price ($)

Change

January 2023

86.06

87.25

86.06

87.37

1.36%

February 2023

87.31

92.13

87.31

92.13

5.23%

March 2023

92.40

93.58

92.40

93.62

1.25%

April 2023

93.96

95.42

93.96

95.85

1.54%

May 2023

95.35

99.78

95.35

99.78

4.44%

June 2023

99.98

101.23

99.89

101.36

1.24%

July 2023

101.26

99.72

99.72

101.45

-1.54%

August 2023

99.64

99.06

98.33

99.64

-0.58%

September 2023

98.95

98.57

98.51

99.27

-0.39%

October 2023

98.60

97.36

97.36

98.91

-1.27%

November 2023

97.35

95.76

95.75

97.42

-1.66%

December 2023

95.49

96.41

94.89

96.46

0.95%

Summary: Brent crude oil is anticipated to enter 2023 between $86.06 and $187.37. It may end 2023 between $94.89 and $96.46. Source: WalletInvestor

Month

Opening price ($)

Closing price ($)

Minimum price ($)

Maximum price ($)

Change

January 2024

96.67

98.01

96.67

98.08

1.38%

February 2024

98.15

103.19

98.02

103.19

4.88%

March 2024

103.25

104.16

103.25

104.31

0.87%

April 2024

104.49

106.09

104.49

106.57

1.5%

May 2024

106.15

110.52

106.15

110.60

3.96%

June 2024

110.68

111.91

110.68

112.03

1.1%

July 2024

111.96

110.43

110.43

112.18

-1.38%

August 2024

110.44

109.61

109.03

110.44

-0.76%

September 2024

109.72

109.29

109.25

109.99

-0.39%

October 2024

109.33

108.21

108.15

109.65

-1.04%

November 2024

108.00

106.35

106.35

108.00

-1.55%

December 2024

106.01

107.39

105.62

107.39

1.28%

Summary: Brent crude oil is anticipated to enter 2024 between $96.67 and $98.08. It may end 2024 between $105.62 and $107.39. Source: WalletInvestor

Looking to the Future: Oil Price Forecasts for 2025-2050 

Developing an oil price forecast is so much more complicated than forecasting currency pairs or crypto because it depends so heavily upon environmental changes in addition to the global economy. Oil is a limited resource, so we'll eventually hit a plateau in production, and, afterwards, this commodity will become scarcer and scarcer. This implies that the price will skyrocket.

Month

Opening price ($)

Closing price ($)

Minimum price ($)

Maximum price ($)

Change

January 2025

107.52

108.71

107.52

108.85

1.09%

February 2025

108.76

113.70

108.76

113.70

4.35%

March 2025

114.26

115.05

114.26

115.07

0.68%

April 2025

115.20

116.86

115.20

117.28

1.42%

May 2025

116.99

121.14

116.85

121.21

3.43%

June 2025

121.33

122.65

121.33

122.70

1.08%

July 2025

122.70

121.30

121.29

122.90

-1.15%

August 2025

121.03

120.26

119.74

121.03

-0.65%

September 2025

120.38

120.02

119.98

120.68

-0.3%

October 2025

120.10

118.79

118.79

120.37

-1.1%

November 2025

118.61

117.21

117.21

118.71

-1.19%

December 2025

116.85

118.13

116.36

118.13

1.08%

Summary: Brent crude oil is anticipated to enter 2025 between $107.52 and $108.85. It may end 2025 between $116.36 and $118.13. Source: WalletInvestor

However, we must not ignore the push for renewable resources. If solar energy becomes the new normal, global oil markets will instead plummet. This is why it's futile to provide a price prediction for crude oil set decades in the future.

Technical Analysis of Oil Price

When determining whether to buy or sell oil, it's crucial to create a technical analysis. We'll show you the top technical indicators to include in crude oil analysis, presented alongside an example.

First, you need to determine whether you want to trade Brent, WTI or both. They trade differently, so they each have their own technical analysis.

Next, choose the timeline that you want to look at. While it's possible to set up technical analysis for timelines as short as 30 minutes, it can also be useful to look at the bigger picture, such as in weekly increments.

You'll also want to decide which technical indicators to use. Some useful ones include: 

Based on the weekly trend, the moving average and technical indicators indicate a strong buy. 

Long-Term Oil Price Predictions by Experts 

We've gathered several long-term price predictions from experts in the field. 

They have several different long-term predictions, in fact, depending on which short-term scenarios are not remedied. In the best-case scenario, in 2040, there will be strong demand growth, and barrels will be worth over $100. If stagnation and oversupply remain, prices will be around $80-90 per barrel. If OPEC remains in control of the market balance, the price per barrel should be between $65 and $75. If there is long-term oversupply, the price per barrel would instead be $50-$60. 

What to Do With Crude Oil: Trade or Invest?

Just as with any other market, there is no guarantee of profit when you invest in oil. Because of its often-fluctuating prices, crude oil is a very risky asset. Therefore, before making an investment decision, be sure to check out the latest expert opinions, market trends, and technical analysis. To build any trading strategy, it's crucial to inform yourself about economic goings-on as deeply as possible. 

But what if you aren't ready to make a long-term investment commitment? With CFDs, you can make trades on the crude oil market in a shorter timeframe without waiting for years. With the Libertex Trading Platform, you can get started trading WTI and Brent Crude Oil CFDs. 

FAQ

Let's finalise this article with commonly asked questions. 

Why trade with Libertex?

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