WTI Crude spot prices are expected to average $50.21 per barrel this year and $51.56 next year, the Energy Information Administration (EIA) said in its monthly Short-Term Energy Outlook (STEO) for February, raising its average price forecast for both WTI and Brent.
In the January outlook, the EIA hadn't expected WTI Crude spot prices to average above $50 per barrel either this year or next year. EIA's call early last month was for an average $49.70 WTI spot price in 2021 and $49.81 per barrel price in 2022.
For Brent Crude prices, the EIA now sees the average spot price at $53.20 a barrel this year and at $55.19 per barrel next year. These projections are higher than in the January outlook, which had forecast Brent to average $52.70 this year and $53.44 in 2022.
Despite the increased outlook for the average annual spot prices, the EIA expects Brent Crude prices to be lower later this year compared to this quarter, as a result of rising oil supply, which is set to slow the global inventory drawdown. According to the EIA, Brent crude will average $56 per barrel in the first quarter this year, and $52 a barrel over the remainder of 2021.
"EIA also expects that high global oil inventory levels and spare production capacity will limit upward price pressures. EIA expects Brent prices will average $55/b in 2022," the administration said.
The EIA expects WTI Crude prices to remain close to $50 a barrel or higher, which will incentivize more U.S production, and output from new wells will exceed the declines from legacy wells at some point in the latter half of this year. Overall crude oil production will increase in the second half of 2021 and in 2022, EIA said, estimating that U.S. oil production will average 11.0 million bpd in 2021-down from 11.3 million bpd in 2020-and will rise to 11.5 million bpd in 2022.
By Charles Kennedy for Oilprice.com
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