Once or twice I make predictions and sometimes I get them spot on and sometimes they are so spectacularly wrong I think it best to crawl under a rock and abandon the recently adopted profession of seer.
Let me take another look at the one which is so far off the mark it is embarrassing. Back in May I predicted that by the end of June the oil price would be $75/bbl. Well I gave myself an out in the title of the piece, "$75/bbl for Brent by June... or not, one of the two" but it would be sophistry to claim that I had really not been predicting a price that looks so far out of reach now that I wonder what on earth I was thinking.
But I had made the mistake of thinking we were on our way out of the slump and I hadn't, in truth, done much more than assume that a six week old trend would carry on for another six weeks. Of course there was a bit more to it than that, I had also been expecting US shale output to slump. That was right too in the Eagle Ford and in the Bakken but the Permian has held up and with every other producer wringing every last drop of production out of their systems, a collapse in US production that had started so promisingly (for someone like me that is an oilman through and through) has lately been stubbornly resistant.
I also didn't expect the Saudis to be quite so determined to flood the market, I thought, as long as a recovering oil price didn't drive the rig count up too far, the Saudis would prefer to capture a moderate price rather than do what they actually did and drive the price right down. Their boot is right on the necks of the shale producers and they aren't letting up.
But what of next year, what will the oil price be? Well I think the first quarter is not going to be pretty, and I'll be surprised if there isn't a wave of bankruptcies and restructurings. Whoever hedged 2016 early in 2015 is looking pretty smart now, and those who left it too late are going to be casualties. It is casualties that the Saudi's want to see, they want Wall Street to force the US independents to repay their debts and divert cash from rigs to bonds. But eventually, they will realise the job is done and there will then be just the small matter of 500 million barrels of excess stocks to work through. So no big recovery in 2016 I am afraid... but I wouldn't be surprised to see that $75/bbl in June 2017, I don't think I ever did say which year.