EIA Lowers Oil Price Forecasts

EIA Lowers Oil Price Forecasts
The EIA has lowered its Brent spot average price forecasts.

The U.S. Energy Information Administration (EIA) has lowered its Brent spot average price forecasts for 2021 and 2022, the organization’s December short term energy outlook (STEO) report has revealed.

The EIA now sees Brent spot prices averaging $70.60 per barrel in 2021 and $70.05 per barrel in 2022, according to its latest STEO. Its previous STEO, released in November, saw Brent spot prices averaging $71.59 per barrel in 2021 and $71.91 per barrel in 2022.

In its latest STEO, the EIA highlighted that Brent crude oil spot prices averaged $81 per barrel in November, which it noted was a $3 per barrel decrease from October 2021 but a $38 per barrel increase from November 2020.

“Crude oil prices have risen over the past year as result of steady draws on global oil inventories, which averaged 1.4 million barrels per day during the first three quarters of 2021,” the EIA stated in its December STEO.

“Crude oil prices fell significantly on November 26, and the Brent spot price began December below $70 per barrel. The drop in prices followed the identification of the new Covid-19 Omicron variant, which raised the possibility that petroleum demand could decline in the near term,” the EIA added.

“We expect Brent prices will average $71 per barrel in December and $73 per barrel in the first quarter of 2022. For 2022 as a whole, we expect that growth in production from OPEC+, of U.S. tight oil, and from other non-OPEC countries will outpace slowing growth in global oil consumption, especially in light of renewed concerns about Covid-19 variants,” the EIA continued.

In its December STEO, the EIA estimated that 99.7 million barrels per day of petroleum and liquid fuels was consumed globally in November, which it said was a 4.9 million barrel per day increase from November 2020 but 1.1 million barrels per day less than in November 2019. The organization noted in the STEO that it had revised down its forecast of consumption of petroleum and liquid fuels for the fourth quarter of 2021 and the first quarter of next year partly as a result of recently announced travel restrictions following reported outbreaks of the Omicron variant.

“The potential effects of the spread of this variant are uncertain, which introduces downside risks to the global oil consumption forecast, particularly for jet fuel,” the EIA noted.

“We forecast that global consumption of petroleum and liquid fuels will average 96.9 million barrels per day for all of 2021, which is a 5.1 million barrel per day increase from 2020. We forecast that global consumption of petroleum and liquid fuels will increase by 3.5 million barrels per day in 2022 to average 100.5 million barrels per day,” the EIA added.

Total U.S. crude oil production was an estimated 11.7 million barrels per day in November, according to the EIA’s December STEO. The organization forecasts that this will rise to an average of 11.8 million barrels per day in 2022 and an average of 12.1 million barrels per day in the fourth quarter of next year.

At the time of writing, the price of Brent crude oil stood at $76.09 per barrel. The price dropped from $82.25 per barrel on November 24 to $72.72 per barrel on November 26.

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


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