EIA Further Cuts Oil Price Forecast

The U.S. Energy Information Administration (EIA) has further cut its Brent oil price forecast, the organization’s latest short-term energy outlook (STEO) has revealed.

Brent spot prices are now expected to average $59 per barrel in the fourth quarter of this year and $63.37 per barrel for the whole of 2019. The commodity is forecasted average $59.93 per barrel in 2020.

“Despite the recent increase in supply disruptions, EIA expects downward oil price pressure to emerge in the coming months as global oil inventories rise during the first half of 2020,” the EIA stated in its latest STEO, which was released on Tuesday.

“EIA forecasts balances to tighten later in 2020 and expects Brent prices to rise to an average of $62 per barrel in the second half of next year,” the EIA added.

“EIA’s October forecast recognizes a higher level of oil supply disruption risk than previously assumed, more-than-offset by increasing uncertainty about economic and oil demand growth in the coming quarters, resulting in a lowered oil price forecast,” the EIA continued.

In its September STEO, the EIA forecasted that Brent spot prices would average $60 per barrel in 4Q and $63.39 per barrel for the whole of 2019. The September STEO also forecasted that Brent would average $62 per barrel in 2020.

In August, the EIA projected that Brent would average $65 per barrel in 4Q, $65.15 per barrel in 2019 and $65 per barrel in 2020. Back in July, the EIA forecasted that Brent would average $67 per barrel in 4Q, $66.51 per barrel in 2019 and $67 per barrel in 2020.

Last month, analysts at Fitch Solutions Macro Research (FSMR) further cut their Brent oil price forecasts. The analysts now expect Brent to average $64 per barrel this year, before dropping to an average of $62 per barrel in 2020.

In August, FSMR analysts expected prices to average $67 per barrel this year and $65 per barrel in 2020. In July the analysts forecasted an average of $70 per barrel in 2019, and $76 per barrel in 2020.

To contact the author, email andreas.exarheas@rigzone.com