What can the oil futures curve tell us about the outlook for oil prices?

Dan Nixon () and Tom Smith ()
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Dan Nixon: Bank of England, Postal: Threadneedle Street, London, EC2R 8AH,, http://www.bankofengland.co.uk

Bank of England Quarterly Bulletin, 2012, vol. 52, issue 1, 39-47

Abstract: Large movements in the oil price have had significant effects on UK CPI inflation over the past few years. In order to produce an inflation forecast, it is necessary to assume a path for oil and other commodity prices. The Monetary Policy Committee assumes that oil prices follow the path given by market futures prices when deciding their central projections for CPI inflation and GDP growth. This article considers arguments for and against using the futures curve as an assumed path and describes some of the other indicators used by the Committee in assessing the outlook for oil prices.

Date: 2012
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