Predicting the future
"...we expect Saudi to abandon its current production maximization strategy and return to Equilibrium Management…” NBROF Annual Outlook 2016-2055, September 2016
After publishing the above foresight in our Annual Outlook, a matter of months later – in late November and early December – Saudi led the “core swingers” within OPEC to resume their role of direct intervention in the market as we had predicted. We also forewarned that this return to Equilibrium Management and associated price rise brought with it a premium risk of reigniting appetite in starved US tight oil investment, a risk which we our continuing to monitor in our Quarterly Updates.
In our Q4 Update, published in December 2016, we also discussed the fragility of the OPEC deal: probable production increases in Libya and Nigeria against a backdrop of delicate security situations; the potential for Iran and Iraq to cheat the cuts; why non-OPEC Russia is unlikely to meet its targets. Our Q1 Update in March 2017 provided insights as these predictions bore fruit.
About the Forecast
The Annual Outlook addresses a number of short- to medium-term challenges in its first chapter, titled “Market Rebalances, the Swingers Return”; But it also moves on to address the long-term fundamental questions of our industry in its later chapters:
- How will the supply/demand Equilibrium change over time in the face of a more responsive tight oil industry?
- What does that mean for mature and frontier regions?
- When will EVs make a significant impact on global demand?
- When and on what scale will LNG impact bunker fuel markets?
- When should we worry about peak demand?
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Our Annual Outlook provides vital strategic foresight that will be an essential tool to aid in your company’s future growth.
Our unique approach provides the most rigorous, balanced and insightful view of likely movements in global liquid hydrocarbon flows over a substantial period. The resulting foresight is relevant not only to corporations and governments directly involved in oil production and consumption but also to any corporation, government or non-governmental organisation whose activities or interests are affected in a material way by the price and availability of liquid fuels.
“It is always great to see NewsBase Research’s insights, they are highly valuable” – Senior Energy Economist of a G8 Government
“NewsBase Research Oil Forecast is extremely useful and thought-provoking, providing insights on the long-term challenges and opportunities we need to plan for” – Strategy & Planning Manager of a Super-Major
Interested in finding out more?
Our December Quarter Four Update and our March 2017 Quarter One Updates is also available to buy as part of a package.
With our Q2 Update being published in June 2017, and ahead of the refresh for our next Annual Outlook, you can now purchase the Annual Outlook and following Quarterly Updates at a discounted rate outlined below:
As well as the Annual Outlook published every September, NBROF publishes three Quarterly Updates in December, March and June. Consulting time with NBR analysts is also available on request, providing deep-dives into subject areas of interest.
We define the global oil market as a Complex Dynamic System, with many interlinking variables interacting over time. Because of this, we believe “extrapolated trend” forecasting is not adequate enough for strategy and risk planners to base multi-million dollar decisions on; as the current price crash, which we predicted*, proved. Instead, we take a more algorithmic approach with human inputs on geopolitics and behavioural finance.Put simply, as the supply/demand equilibrium changes over time, this drives price moves – and so political and economic pressures change within the system. With input from the NB Intelligence global editorial team, NBR analysts predict how decision-makers within the system would respond to these pressures as they change over time (including views on geopolitics, investment, technology, efficiency and EVs). This creates feedback loops into the supply/demand dynamics, which we ‘rinse and repeat’ creating new feedback loops. This continues until the forecast reaches a stability in which all points in the system behave as we would expect within our paradigms. This forms our Annual Forecast.Within Annual Outlook we identify WatchPoints, inputs that could have a significant up- or down-side effect on future supply, demand or price. These WatchPoints are tracked in our Quarterly Updates ahead of the full refresh for the next Annual Outlook.Our supply-side analysis tracked 463 production data series, and some 20,000 individual discrete analytic points. We apply processes developed by NBR that analyse and predict the production profiles of sedimentary basins and geological regions/systems, moderated by geopolitical and financial considerations (Basinology™). Basinology™ is supplemented by proprietary analysis and prediction of production levels for tight oil and industrial liquids – hydrocarbon liquids produced through various industrial processes from oil sands, methane, coal, in-situ and ex-situ kerogen processing, biofuels and algae.On the demand side, we apply proprietary analytical algorithms developed and tested by NBR to predict demand for hydrocarbon Liquids by tracking and predicting national Oil Intensity Factors (OIFs) and by tracking, measuring and predicting movements in the Efficiency (or inefficiency) of 196 world economies. To achieve this, our demand-side analysis tracks and uses around 2,000 data series, containing over 140,000 individual analytic points.*Ahead of the price crash, September 2014 NBROF Annual Outlook predicted: “We expect Saudi to create price volatility through periods of over- and under-production in order to discourage investment in Industrial and unconventional Liquids – especially US tight oil.”