The effect of the COVID-19 pandemic to the WTI crude oil price using forecasting models

Marcelo Guarido, Daniel O. Trad, Kristopher A. Innanen

Accurately forecasting the price of oil can be considered a Holy Grail in the petroleum industry, and even more important to take business decisions during a crisis, like the COVID-19 pandemic. For that, we are proposing the use of an ensemble of powerful forecasting methods to do an impact analysis of the pandemic to the oil and gas industry. By forecasting the prices with models trained with oil prices prior to 2020, we created a baseline of what the price of the WTI crude oil should have been without the pandemic and, with the information of the US production, we estimated that, in 6 months of the pandemic, a loss of around 60 billion USD in the US alone. We also estimate that, if the scenario of the pandemic does not change, the price of the oil for the 12 months after October 2020 will stay on a stable low level around 37 USD per barrel.