Vetr Blog

Crowdsourced price predictions for the stock market.

Oil Challenge Update: A Bearish Tilt

The decline in the price of crude oil has been front and center on investor’s minds since the end of last year, and equity prices continue to key off movements in oil’s price. The collapse of crude has decimated the share prices of energy companies, slashed CAPEX budgets in 2015 and generated layoffs across the sector. They key question: Where does crude oil go from here?

Two weeks into our Oil Price Challenge, Vetr.com users have put up 53 predictions on where they think the price of West Texas Intermediate will be at the end of the day March 31st. Although still a relatively small sample size, looking at the data to date reveals some interesting statistics:

Of our 53 ratings to date, 35 were bullish forecasts when they were made, compared to 28 that were bearish. In other words, the predicted price was either above or below the price of oil at the time of the rating. This is perhaps unsurprising, since oil had already fallen precipitously when we started the contest on January 26th and it is fairly common for Vetr.com users to rate counter to a security’s immediately prevailing trend. Nonetheless, the near-parity of opinion at the time of rating suggests at least the expectation of a bottom forming in the near future.

Of course, crude oil’s rebound off the lows of January have shifted these numbers around somewhat. As of this writing, 27 of our ratings remain bullish, i.e. they are still above the current $51.67 per barrel quote, while 36 targets are now below it. As a group, the average prediction among Vetr.com users is for WTI crude to close at $47.03 per barrel on March 31st, while the median rating is $47.55. Meanwhile, the range of predictions is bordered by very pessimistic $30 per barrel on the low end and a ragingly bullish $77 on the high end; interestingly, both bookend ratings are roughly an equal distance (42% and 49%, respectively) away from the current quote.

For what it’s worth, a recent Reuters survey of 33 economists and analysts expect the price of Brent crude oil to average $58.30 per barrel in 2015 (Brent crude usually trades for a small premium over WTI).

As a reminder, Vetr.com’s oil price contest will award a pair of Beats headphones to the user with the closest prediction as of 5:30 PM EST on March 31st, 2015. Predictions can be entered and modified up to February 28th, after which they will be locked. Check out the details here.