The oil industry has kept a prominent place in the world’s economics for over a century. Sales forecasting in this field has remained somewhat stable and has developed a number of reliable methods. Nevertheless, the changing trends and permanent conditions of economic mechanisms significantly influence oil sales forecasting. This paper will observe how the law of supply and demand and financial market trends impact sales forecasting for oil in the world.
The first factor affecting sales forecasting for the oil industry is based on the fundamental rule of supply and demand that defines the prices on the market and interactions between sellers and buyers. The paper by Arezki et al. (2017) has confirmed that the depletion of oil sources results in supply shortages and an increase in prices. The paper also comments on the possibility of new oil sources being discovered, immediately affecting the demand and supply ratio (Arezki et al., 2017). With this in mind, it is possible to alter sales forecasts based on the information about newly found or depleted oil fields when considering them as suppliers.
The other key element that influences oil sales is its relationship with financial market trends. According to Miao, Ramchander, Wang, and Yang (2017), three elements correlate with oil prices: U.S. interest rates, exchange rates, and the stock market. Since sales forecasting is directly dependent on global oil prices, all of those factors are widely used to obtain short-term prospects. For example, Miao et al. (2017) explain that due to producers trying to maintain the same purchasing power of the export revenue, the weakening of the U.S. dollar would lead to increased oil prices. Also, one could predict reduced demand for oil in countries whose currencies are dependent on the U.S. dollar, illustrating how financial market trends can be used in oil sales forecasting.
To summarize, several global factors have an impact on oil sales. This paper has observed two of them: the depletion of oil sources which activates supply shortage and higher demand, and the changes in the financial market, which forced producers to raise export prices. With the information on just these two elements of sales forecasting, one is able to develop a strategy for understanding and predicting oil price variations.
References
Arezki, R., Jakab, Z., Laxton, D., Matsumoto, A., Nurbekyan, A., Wang, H., & Yao, Z. (2017). Oil Prices and the Global Economy. International Monetary Fund. Web.
Miao, H., Ramchander, S., Wang, T., & Yang, D. (2017). Influential Factors in Crude Oil Price Forecasting. Energy Economics, 68. Web.