EIA Decreases Oil Price Forecasts



EIA Decreases Oil Price Forecasts
The U.S. Energy Information Administration has reduced its Brent crude and West Texas Intermediate spot price predictions for both 2020 and 2021.

The U.S. Energy Information Administration (EIA) has reduced its Brent crude and West Texas Intermediate (WTI) spot price predictions for both 2020 and 2021, its latest short-term energy outlook (STEO) has revealed.

According to its November STEO, the EIA now expects Brent crude spot prices to average $40.61 per barrel this year and $46.59 per barrel in 2021. WTI spot prices are expected to average $38.24 per barrel in 2020 and $44.24 per barrel in 2021.

Back in October, the EIA forecasted that Brent crude spot prices would average $41.19 per barrel in 2020 and $47.07 per barrel in 2021. WTI spot prices were expected to average $38.76 per barrel this year and $44.72 per barrel next year.

In its latest STEO, the EIA noted that Brent prices fell in October as previously disrupted crude oil production in Libya came back online and as Covid-19 cases began increasing in many countries, which it warned could reduce oil demand in the coming months.

“Despite these developments, the U.S. Energy Information Administration expects global oil inventories to continue falling in the coming months,” the EIA stated in its November STEO.

“However, EIA expects high global oil inventory levels and surplus crude oil production capacity will limit upward pressure on oil prices and that Brent prices will remain near $40 per barrel through the end of 2020,” the EIA added in its STEO.

“EIA expects that as global oil demand rises, forecast inventory draws in 2021 will cause some upward oil price pressures,” the EIA continued.

The EIA said that its November STEO remains subject to heightened levels of uncertainty because the responses to Covid-19 continue to evolve. The organization noted that its latest STEO assumes U.S. GDP will grow by 3.7 percent from 2020 to 2021.

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