EIA Raises 2020 Oil Price Forecasts

The U.S. Energy Information Administration (EIA) has raised its 2020 average spot price forecasts for both Brent and West Texas Intermediate (WTI) oil.

According to its latest short-term energy outlook (STEO), which was released on Tuesday, the EIA now sees Brent spot prices averaging $41.42 per barrel and WTI spot prices averaging $38.50 per barrel in 2020. In its previous STEO, the EIA forecasted that Brent spot prices would average $40.50 per barrel and WTI spot prices would average $37.55 per barrel this year.

Looking further ahead, the EIA now predicts that Brent spot prices will average $49.53 per barrel in 2021, which is a slight reduction on its previous 2021 projection of $49.70 per barrel. WTI spot prices are expected to average $45.53 per barrel next year, which also marks a slight decrease on the EIA’s previous prediction of $45.70 per barrel.

In its latest STEO, the EIA said it expects high inventory levels and surplus crude oil production capacity will limit upward price pressures in the coming months. The organization added, however, that as inventories decline into 2021, upward price pressures will increase.

The EIA estimates that global liquid fuels inventories rose at a rate of 6.4 million barrels per day (MMbpd) in the first half of this year and expects they will decline at a rate of 4.2MMbpd in the second half of 2020, then by 0.8MMbpd in 2021.

The organization noted that its latest STEO “remains subject to heightened levels of uncertainty because mitigation and reopening efforts related to the 2019 novel coronavirus disease (COVID-19) continue to evolve”.

As of August 11, there have been 19.9 million confirmed cases of Covid-19, with 732,499 deaths, according to the World Health Organization (WHO). The U.S. has seen 4.9 million confirmed cases and 161,547 deaths, as of August 11, WHO data shows.

The EIA is the statistical and analytical agency within the U.S. Department of Energy. It collects, analyzes, and disseminates independent and impartial energy information to promote sound policymaking, efficient markets and public understanding of energy and its interaction with the economy and the environment, its website states.

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