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How accurate are oil price forecasts?

In: CNB Global Economic Outlook - March 2021

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  • Jan Hosek

Abstract

Oil prices strongly affect many economic variables and are therefore an important input to many economic models. From the central bank's perspective, their effects on prices in manufacturing, consumer prices, aggregate demand and the balance of trade are of greatest importance. The governments of oil-exporting countries additionally have to take into account the supply-side response and the impacts on national budgets. It is thus important to monitor past, present and projected future trends in oil prices. There are a large number of oil price forecasts, yet the vast majority of them are not normally available to the public. In this article, we will assess the accuracy of the three oil price forecasts we comment on most often in GEO - the forecast derived from the market curve based on Brent crude oil futures, the US EIA's model-based forecast and the predictions obtained from the regular Consensus Forecasts surveys.

Suggested Citation

  • Jan Hosek, 2021. "How accurate are oil price forecasts?," Occasional Publications - Chapters in Edited Volumes, in: CNB Global Economic Outlook - March 2021, pages 12-17, Czech National Bank.
    • Handle: RePEc:cnb:ocpubc:geo2021/3
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    References listed on IDEAS

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    1. Harold Hotelling, 1931. "The Economics of Exhaustible Resources," Journal of Political Economy, University of Chicago Press, vol. 39, pages 137-137.
    2. Kilian, Lutz & Rebucci, Alessandro & Spatafora, Nikola, 2009. "Oil shocks and external balances," Journal of International Economics, Elsevier, vol. 77(2), pages 181-194, April.
    3. Christiane Baumeister, 2014. "The Art and Science of Forecasting the Real Price of Oil," Bank of Canada Review, Bank of Canada, vol. 2014(Spring), pages 21-31.
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