Making Predictions

Yogi Berra once said, 'Making predictions is tough, especially about the future'.

The Energy sector is so unpredictable just now that it changes on a day to day basis. Somes days there seems to be an inkling of positive change, but then the effects of the credit crunch find a new and interesting way to cause the sector to stall.

I was asked at the weekend for my view of the oil price. I paused, knowing full well that if I could accurately predict it I would be in a different job altogether. So I predicated my response with, 'Here is what I want to believe....':

• We are approaching peak driving season in the States
• The 'glut' of oil stocks is starting to dwindle
• Recent Opec production cuts will start to have an effect
• The underlying trend is still scarcity of supply, even with reduced worldwide demand

With all that in mind I suggested that the oil price could recover from the low to mid $40's to around the $60 per barrel mark. 'But would you bet your mortgage on it?' I was asked. I said no, but on reflection, I already have.