All or Nothing is the Range Established in the Latest Round of Oil Price Predictions

About the only certainty in what has become a chronically uncertain market is the abundance of predictions about where prices will go in the near term

In the latest round of predictions dominating coverage of the oil sector, the U.S. Energy Information Administration (EIA) forecasts that Brent crude oil prices will average $40 per barrel this year and climb to $50/b in 2017, and West Texas Intermediate (WTI) prices will be $2/b and $3/b lower than Brent in 2016 and 2017 respectively.

While stating in its Short-Term Energy Outlook that the predictions are fraught with "high uncertainty", the EIA goes on to state that oil inventories, which increased by 1.9 million barrels per day (bpd) in 2015, will rise by another 0.7 million bpd this year "before the global oil market becomes relatively balanced in 2017."

As for production, the EIA notes that the Organization of the Petroleum Exporting Countries (OPEC) will account for most of the growth over the next two years, while non-OPEC production will decline for the first time since 2008 by 0.6 million bpd this year.

About the only certainty in what has become a chronically uncertain market is the abundance of predictions about where prices will go in the near term: Dr. Hossein Askari, a professor at The George Washington University, told Oil & Gas 360 that a war between Saudi Arabia and Iran could result in oil overnight shooting above the $250 mark and then sinking to the $100 level.

He added, "If they attack each other's loading facilities, then we could see oil spike to over $500 and stay around there for some time depending on the extent of the damage."

Or, according to the Our Finite World blog, oil might even trade below $0 per barrel: blogger Gail Tverberg writes, "If the run-up in oil supply is heavily front-ended to the December to April period, similar to what happened a year ago, lack of crude oil storage space could become a problem within the next three months; oil prices could fall to $10 or below.

"We know that for natural gas and electricity, prices often fall below zero when the ability of the system to absorb more supply disappears; it is not clear the oil prices can fall below zero, but they can certainly fall very low."

An earlier prediction from the EIA has a ring of truth: in September, it stated that OPEC's strategy of refusing to cut production to keep market share will see it win the current price war.