EIA Raises Crude Oil Price Outlook

The Energy Information Administration lifted its outlook for Brent crude oil prices for this year and next, the agency said in a Tuesday report.

The EIA now sees the spot price for Brent crude oil averaging $87 per barrel, according to the latest edition of the Short-Term Energy Outlook published on Tuesday. That’s up 5.6% from the previous month’s forecast of $82, and up from the current price of just over $82 per barrel.

For next year, the EIA sees the crude oil benchmark averaging $85 per barrel—a 6.7% increase over the $79 per barrel forecast the agency made last month.

This compares an $82 average in 2023 for Brent and an average Brent crude spot price of $83 per barrel in February—up $3 per barrel from January on the back of “continuing uncertainty and increased risk around the attacks targeting commercial ships transiting the Red Sea shipping channel, as well as an anticipated extension to voluntary OPEC+ production cuts, which were officially announced on March 4.”

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The EIA also reduced its forecast for global oil production growth this year due to OPEC+’s extension of its oil production cuts in the second quarter of this year.  “The lower growth contributes to significant global oil inventory declines in our forecast for the second quarter of 2024 (2Q24).” With the drop in inventories, the EIA said, “We now expect the Brent crude oil spot price will average $88 per barrel (b) in 2Q24, up $4/b from our February STEO, and we expect the Brent price will average $87b this year,” the EIA said in its forecast overview.

The EIA expects that the tighter oil market balance this year will keep Brent prices above current levels before increasing inventories as a result of OPEC+ rolling back its production cuts at the end of the year starts to put downward pressure on prices next year.

By Julianne Geiger for Oilprice.com

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