Q:

How do you project oil prices in the next 5 years using a historical chart?

A:

Quick Answer

Plot oil prices for a 5-year period as the average price per barrel vs. time (days, months or years) for a historical chart. Sources such as Forbes use economic indicators to help forecast oil prices.

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Full Answer

Most oil charts show oil prices as changes in average price per barrel. They also show the changes in U.S. dollars over days, months or years depending on the level of detail needed, as reported in Forbes.

Online investment information services like Investopedia show oil prices in a variety of formats. One of the most common formats is a line graph. Other chart formats include bar graphs and candlestick charts (shows highest and lowest sale price at a given time).

Investopedia and other finance sources base their price charts on West Texas Intermediate light crude oil (WTI) prices. Other forecasts use projections based on prices from the New York Mercantile Exchange (NYMEX), one the largest commodity markets in the U.S.

Oil responds directly to supply and demand. Supply and demand is influenced by economic indicators such as oil production and exploration, groups like the OPEC cartel, regional conflicts and cyclical patterns.

Future projections are also based on historical data on oil performance collected since the beginning of the 20th century or earlier.

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