EIA projects Brent at around $89/bbl in 2H 2024
Declining inventories and the extension of OPEC+ cuts will keep Brent crude spot price at an average of around $89/bbl in the second half of 2024 and $91/bbl in the first quarter of 2025, the US Energy Information Administration’s (EIA) estimated.
PHOTO: Crude oil storage spheres tank photographed at night. Getty Images
Global oil inventories will continue to decline by 700,000 b/d in the second half of 2024 and reduce through mid-2025, as the market continues to recover from OPEC+ supply cuts, the EIA said in its July short-term energy outlook (STEO) report.
The US-headquartered energy agency projects that between the third quarter of 2024 and the first quarter of 2025, global oil inventories will drop by an average of 800,000 b/d. “We anticipate that the market will gradually return to moderate inventory builds in 2025 after the expiration of voluntary OPEC+ supply cuts in 4Q24 [fourth quarter 2024],” it said.
According to the EIA, through the second half of 2025, the steady increase in oil supply from non-OPEC+ countries will offset global oil demand growth and support inventory builds. The energy agency expects global oil inventories to increase at an average of 300,000 b/d and 400,000 b/d in the third and fourth quarters of 2025.
Meanwhile, Brent’s spot price is expected to average $88/bbl in 2025 as rising inventory levels weigh down oil prices in the second half of the next year, the EIA said.
Supply and demand estimates
Production growth outside of OPEC+ is expected to remain strong in 2025, the EIA said. Global liquid fuels production is expected to grow by 600,000 b/d in 2024 to 102.4 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 1.3 million b/d in 2024,” the energy agency said.
Crude oil production from non-OPEC+ countries is projected to grow by about 1.9 million b/d this year. The US, Brazil, Canada, and Guyana will lead the non-OPEC production growth.
The EIA projects global oil demand to increase by 1.1 million b/d to reach 102.9 million b/d in 2024 and an increase of 1.8 million b/d to 104.7 million b/d in 2025. Non-OECD Asian nations, including India and China, are anticipated to drive demand growth during this period, offsetting a small decline in OECD regions, particularly in Europe and Japan.
The persistent missile attacks by Houthi militants on commercial ships in the Red Sea have kept geopolitical risks in the Middle East high. This is causing delays in shipments due to longer shipping routes taken by tankers and has supported global oil demand growth this year, the EIA said.
“These attacks have largely cut off the shipping channel for many oil shipments,” the agency said. “The potential for further escalation and the lack of any potential resolution around the Red Sea attacks has added higher shipping costs and an ongoing risk premium to oil prices in the near term,” it added.
By Aparupa Mazumder
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