World petroleum markets : a framework for reliable projections
Donovan, W. Graeme
This report summarizes the principal factors that influence long-run conditions in the petroleum markets and presents a framework for projecting crude oil prices, based on leading economic indicators, that is more reliable than other forecasting approaches. The report is based upon analysis of oil market conditions over a period of over 100 years. The forecasting approach proposed in the report is based on the hypothesis that the characteristics of the oil market produce cyclical patterns in the industry's activity and oil prices. The long run future of the world oil market can be projected as a continuation of the cycles of expansion and contraction. A potentially controversial conclusion of this analysis is that the events of the past fifteen years in the industry can be interpreted in the context of world oil cycles experienced throughout the history of oil as a commercially produced commodity. The indicators in this report were developed from limited work. The interesting results thus achieved show the potential of this approach. Further development work could lead to the identification of better indicators of the timing and amplitudes of future cycles in oil prices, thereby improving the credibility of this approach for use in an investment or policy-making framework.
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