EIA lowers Brent price outlook to average $104/bbl in 2H 2022

Brent is now forecast to average $104.05/bbl in second half of this year, before falling to $93.75/bbl average next year, the US Energy Information Administration (EIA) said in its latest short-term outlook.

PHOTO: A storage facility for oil prior to being transported for refining and distribution for energy consumption throughout the United States. Getty Images

The EIA's latest price forecast for this year is more than $3/bbl lower from its earlier projection of a $107.37/bbl average.

The EIA cautions that the forecast is highly uncertain amid the evolving situation in Ukraine and a potential further slowdown in global economic activity, which could affect energy consumption.

It goes on to say that actual prices will depend on how the existing and potential future sanctions on Russia affect production and sale of Russian oil in the global market.

Meanwhile, a rise in US and OPEC liquid fuels production could couple with poor consumption growth and lead to an 800,000 b/d build in global oil inventories over the course of this year, and sustain that level through next year.

It expects global consumption of liquid fuels to grow by 2.2 million b/d this year and by 2.0 million b/d in 2023.

The EIA forecasts OPEC crude oil production to rise by 2.4 million b/d to average 28.7 million b/d this year, and rise further to 29.3 million b/d next year.

It assumes that OPEC+ member countries will not increase production in accordance with their targets this year due to limited output capacity and uncertainty over global oil demand.

US oil production is projected to increase to 12.8 million b/d next year, from this year’s production estimate of 11.9 million b/d.