The US Energy Information Administration (EIA) cut its average Brent price forecasts for 2023 and 2024 in its latest Short-Term Energy Outlook (STEO), which was released on May 9.
According to the latest STEO, the EIA now sees the Brent spot price averaging $78.65 per barrel this year and $74.47 per barrel next year. In its previous STEO, which was released in April, the EIA projected the Brent spot price to average $85.01 per barrel in 2023 and $81.21 per barrel in 2024.
Quarter by quarter, EIA sees Brent spot price at $77.56 per barrel in the second quarter of this year, $78 per barrel in the third and fourth quarters of 2023, $77 per barrel in the first quarter of 2024, $75 a barrel in the first quarter of 2024. barrel in the second quarter of next year, $74 a barrel in the third quarter of next year and $72 a barrel in the fourth quarter of 2024, showed the last STEO
In its May STEO, the EIA noted that the spot price of Brent crude fell from an average of $85 per barrel in April to close at $73 per barrel on May 4. At the time of writing, Brent is currently trading at $76.93. per barrel
“Earlier in April, OPEC and its partners (OPEC+) announced a cut in crude oil production of 1.2 million barrels per day until the end of 2023, boosting crude prices against expectations of tightening oil supplies,” the EIA said in its May STEO.
“However, ongoing considerations of weakening global economic conditions, perceived risk around the global banking sector and persistent inflation overrode the initial increase in oil prices and have driven prices lower,” the EIA added.
“While demand growth for liquid fuels faces downside risks until the end of 2024, we expect the seasonal increase in oil consumption and a drop in OPEC crude production to exert a some upward pressure on crude oil prices in the coming months,” the EIA continued. .
The organization revealed in its May STEO that it expects global consumption of liquid fuels to increase by 1.6 million barrels per day in 2023 and by 1.7 million barrels per day in 2024. The most expected growth in demand of liquid fuels is in non-OECD Asia, led by China and India, the EIA noted in STEO.
“We expect this demand growth to rebalance the global oil market between 3Q23 and 1Q24 and push the price of Brent back from current levels to between $75 per barrel and $80 per barrel” , the EIA said at the May STEO.
“From 2Q24, we expect global oil inventories to steadily increase for the remainder of the forecast period as global oil production outpaces global oil demand, putting downward pressure on crude oil prices,” the EIA added.
“We forecast global oil inventories to grow by 0.3 million barrels per day in 2024, and we forecast the spot price of Brent crude to average $74 per barrel in 2024, $7 per barrel lower than in last month’s STEO,” the EIA continued. been
Standard Chartered, BofA
In a separate report sent to Rigzone on May 9, Standard Chartered revealed that it is currently projecting the price of Brent to average $91 per barrel this year, $98 per barrel next year and $109 per barrel in 2025 .
This report highlighted that the company sees the price of Brent at $88 a barrel in the third quarter of this year, $93 a barrel in the fourth quarter of 2023, $92 a barrel in the first quarter of 2024, $94 in barrel in the second quarter of 2024. 2024, and $98 per barrel in the third quarter of next year.
“We believe that speculative swings have become excessive, relative to the underlying news flow and fundamental data,” analysts at Standard Chartered said in the report.
“Whether this is caused by over-reliance on similar algorithms or similar analysts is debatable; the result is the generation of unnecessary volatility,” the analysts added.
“In our view, the scale of speculative shorting over the past two weeks is difficult to justify in terms of current oil fundamentals or the macro environment,” the analysts said.
In another report sent to Rigzone this week, BofA Global Research revealed that it had cut its average Brent forecast for this year.
“With negative macro trends poised to amplify demand weakness, we cut our median Brent crude price forecast to $80 per barrel in 2023,” BofA Global Research said in the report.
“Even then, we leave our 2024 Brent crude forecast at $90 a barrel because we believe OECD demand will eventually improve, while OPEC+ will likely continue to proactively and preemptively manage supply” , the company added in the report.
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