Try (#181273),
My post was just a light-hearted response to YM's possible $125/bbl expectations of the POO in the near future. But I do think you misunderstand the nature, role and functions of independent forecast firms.
Their job is to provide the market (through their clients) what a multitude of current assumptions yeilds in terms of value (in this case value of oil) going forward. Most translate and input these assumptions into proxy mathematical variables and have constructed complex models to produce a range of possible outputs. These are then reconstructed into plain English and form the basis of the projection.
May I add that as far as I am aware the firm in question has a construct which encompasses some 25,000 different variables. Other reputable independent firms (and there are not that many around) possess similarly own analytical tools.
Companies then take these (very expensive) projections under advice (usually do so from three or four similar sources)and proceed to articulate their own unique company specific projections. But neither forecasting nor company projections are written in stone. As in all business planning, they change as life an circumstances evolve.
Yet is is no accident that almost all oil companies now use $60/bbl for their long range planning (down from $70/bbl last year). Nor should one be taken aback, that forcast firm projections may alter slightly from year to year.
At least some proxy variables do change in content sometimes even weekly. But their overal impact is weighted in the context of those 25,000 other inputs also contributing to the final product.
......so even if there is another major flare-up in the broader ME, rest assured the risk and implications, short term and long term, have been taken into account. .....Nobody, not even the wealthiest bank or oil company (or even some governments), pays the amount of money these firms charge for a twenty page report, if they get dished up with anything less than full coverage.
regards,
spp119
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