EIA forecasts Brent’s price at around $85/bbl in 2H 2024
Extension of OPEC+ voluntary cuts into the third quarter will keep Brent’s price at an average $85/bbl in the second half of 2024, the US Energy Information Administration (EIA) said.
PHOTO: Oil barrels. Getty Images
Global oil inventories will continue to decline in 2024 due to the ongoing OPEC+ supply cuts, before returning to modest inventory builds for most of 2025 as the oil producers’ group starts to gradually unwind voluntary supply cuts from October 2024, the EIA said in its June short-term energy outlook (STEO) report.
The US-headquartered energy agency expects global oil inventories to increase by an average of 400,000 b/d in the second quarter of 2025 and by 600,000 b/d in the second half of next year. “We expect growth in global oil supply will outweigh growth in global oil demand growth, returning the market to moderate inventory builds for most of 2025,” it said.
Earlier this month, OPEC and its allies decided to extend the cuts until the end of 2025. Additionally, Saudi Arabia and seven other countries will maintain voluntary cuts of 2.2 million b/d until September 2024. But these countries plan to gradually phase out these cuts on a monthly basis between October 2024 and September 2025.
“Given the extension of these production cuts, our expectation is that OPEC+ crude oil production will follow these new targets until early 2025,” the EIA said. “At that time, we expect that some OPEC+ producers will keep production below the targets in an effort to limit global oil inventory builds,” it added.
Supply and demand estimates
Production growth outside of OPEC+ is expected to remain strong in 2024 and 2025, the EIA said. Global liquid fuels production is expected to grow by 800,000 b/d in 2024 to 102.5 million b/d, down from a growth rate of 1.8 million b/d in 2023.
“We now expect OPEC+ liquid fuels production to decrease by 1.2 million b/d in 2024,” the energy agency said.
Crude oil production from non-OPEC+ countries is projected to grow by about 2 million b/d this year, the EIA said. The US, Brazil, Canada, and Guyana will lead the non-OPEC production growth.
The EIA projects global oil demand to reach 102.9 million b/d in 2024 and increase to 104.5 million b/d in 2025. Non-OECD Asian nations, particularly China and India, are anticipated to drive demand growth during this period.
A surge in liquid fuels consumption from non-OECD Asian countries due to the increased demand for bunker fuel driven by disruptions in the Red Sea and longer shipping routes taken by tanker will support global oil demand growth in 2024 and 2025, the EIA said.
“We expect increases related to bunker fuels will contribute around 10% of total oil consumption growth in 2024,” the agency said.
By Aparupa Mazumder
Please get in touch with comments or additional info to news@engine.online
