EIA downgrades Brent price forecast to average $83/bbl this year
In its January short-term energy outlook report, the US Energy Information Administration (EIA) predicts Brent prices will decline further to $78/bbl next year due to rising global oil inventories.
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According to the EIA, global liquid fuel production will increase by 1.1 million b/d this year and by 1.7 million b/d next year. “This increase reflects large growth in several non-OPEC countries and in OPEC output that more than offset 1.5 million b/d of declines in Russia’s production over the forecast period,” it says.
US and non-OPEC producers outside Russia are estimated to add 2.4 million b/d of oil production this year and 1.1 million b/d in 2024.
Liquid fuel production in Russia is expected to decline by 1.4 million b/d this year to 9.5 million b/d. The decline is expected to continue next year by another 100,000 b/d.
The EIA predicts that most crude oil exports from Russia will find buyers. However, it notes that compared to crude oil, EU sanctions on petroleum products will affect Russian oil production and exports more. This is because it will likely be more challenging to find alternative buyers, transportation, and other services to reach those buyers.
Crude oil output from OPEC member nations is forecast to average 28.64 million b/d in the first quarter of this year, which is slightly changed from December. It expects OPEC to average 28.87 million b/d throughout the year, which is about 130,000 b/d less than its December outlook. The EIA expects OPEC output to average around 29.5 million b/d next year.
Oil demand worldwide is predicted to slow this year, before picking up again in 2024, when global GDP growth is expected to rise from 1.8% to 3.3%.
“Although we forecast global oil consumption to increase, our demand forecast remains uncertain as a result of ongoing concerns around global economic conditions and the impact of the easing COVID-19 restrictions and rising case counts in China,” it adds.
By Konica Bhatt
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