As we begin 2019, the energy markets and the stock markets are experiencing incredible volatility. Both underwent steep declines during the latter part of last year, but both are off to a fast start in the new year.
How might this all play out in 2019?
Below are my predictions for some of the significant energy trends I expect this year. As I often point out, the discussion behind the predictions is more important than the predictions themselves. That’s why I provide extensive background and reasoning behind the predictions.
I also provide predictions that are specific and measurable. At year’s end, there are specific metrics that will indicate whether a prediction was right or wrong.
1. Oil prices will rise at least $25/bbl in 2019
Six months ago, when oil prices were pushing above $70/bbl, I was preparing to make a more conservative oil price prediction for 2019. I thought the price rise would slow heading into 2019, but what I didn’t foresee was the collapse in prices that took place in the second half of 2018.
That collapse in oil prices makes this prediction a lot easier. The price of West Texas Intermediate (WTI) closed the last day of 2018 at $45.15/bbl, after falling $30/bbl in the last three months of the year. Oil closed $15/bbl lower than it opened the year. Meanwhile, U.S. crude oil inventories are almost exactly where they were a year ago.