The US Energy Information Administration (EIA) raised its average Brent spot price forecast for both 2023 and 2024 in its latest Short-Term Energy Outlook (STEO), which was released on April 11
Based on the April STEO, the EIA now sees Brent spot prices averaging $85.01 per barrel this year and $81.21 per barrel next year. The EIA’s previous STEO, which was released on March 7, projected the Brent spot price to average $82.95 per barrel in 2023 and $77.57 per barrel in 2024.
“The Brent spot price in our forecast is $85 per barrel in 2023, an increase of $2 per barrel from last month’s forecast,” the EIA said in the latest STEO.
“The higher price forecast reflects a forecast of lower global production in 2023 and a relatively unchanged outlook for global oil consumption,” the EIA added.
“Despite our forecast for higher prices, recent issues in the banking sector raise the potential for economic growth and oil demand to be lower than our forecast, which may lead to lower oil prices,” he warned. the EIA in the STEO.
In its April STEO, the EIA noted that it expects global oil markets to be in relative balance over the coming year.
“Global oil inventories, which increased by 0.4 million barrels per day in 2022 and by 1.1 million barrels per day in 1Q23, will remain almost unchanged in the second half of 2023,” the EIA said in the STEO.
“We expect builds to average around 0.5 million barrels per day from 2024. This forecast assumes that the recent OPEC cuts expire in early 2024. Given our forecast for oil markets relatively balanced in 2H23, we expect prices to average $86 per barrel for the remainder of 2023,” the EIA continued.
In the STEO, the EIA noted that downward price pressures emerge in the second quarter of 2024, “when we expect global oil inventories to begin to increase more significantly.”
“However, because these accumulations are dependent on increased OPEC crude production, the uncertainty in the forecast for this period comes from lower oil production than we anticipate, which could lead to higher prices than in our forecasts,” the EIA said.
$100 Brent?
In one extraordinary market update sent to Rigzone earlier this monthRystad Energy Senior Vice President Jorge Leon noted that if fully implemented, the recently announced OPEC+ cuts would further tighten an already fundamentally tight oil market, driving Brent toward $100 a barrel before the which was expected and would increase the price to around $110 per barrel this year. summer
When asked if Brent will hit $100 a barrel this year, James Davis, Director of Global Short-Term Oil Service and Head of Upstream Oil at FGE, told Rigzone: “It is now very likely that Brent will move to more than $100 a barrel this year, given the 1.15 million barrels per day of extra voluntary cuts planned for May by various OPEC+ members.”
When asked the same question, Ed Morse, Managing Director and Global Head of Commodity Research at Citi Group, told Rigzone: “We think it is very unlikely that Brent prices will rise above $100 this year and if he does he won’t. he’s likely to stay there for a long time.”
“Yes, are the balances between supply and demand tight? Given the decision by several countries to cut production from May, market balances are likely to tighten, with a year-on-year inventory change of just over 100 thousand barrels per day on average,” he added.
“We see more downside risk than upside to our Brent oil forecast averaging $84 per barrel in 2023,” Morse continued.
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