In May 2011, we predicted oil (WTI) price to fall to the level of $70 per barrel by the end of 2011. This is a monthly revision for August 2011. We consider the average oil price of $86 per barrel what is equivalent to the producer price index of 240 in August. (Actual estimate will be published by the Bureau of Labor Statistics in the middle of September.)
Figure 1 compares our prediction with actual oil price in 2011. In August 2011, the predicted price is a bit higher than the predicted one. However, we still expect the price to fall by approximately $6 per month to the level of ~$70 in December 2011. We also expect the price to slowly fall through 2016 and put the uncertainty bounds for the long-term trend in oil price. The level of oil price in 2016 is between $30 and $60 per barrel.