EIA Slashes 2023 Brent Forecast

The U.S. Energy Information Administration (EIA) has cut its 2023 Brent spot average price forecast by 10 percent in its latest short term energy outlook (STEO).

The EIA now sees the commodity averaging $83 per barrel this year, compared with $92 per barrel in its previous STEO. Looking ahead to 2024, the EIA’s latest STEO sees the Brent spot price averaging $77.57 per barrel. Brent spot prices averaged $100.94 per barrel in 2022 and $70.89 per barrel in 2021, the latest STEO highlighted.

“We forecast that the Brent crude oil price will average $83 per barrel in 2023, down 18 percent from 2022, and continue to fall to $78 percent in 2024 as global oil inventories build, putting downward pressure on crude oil prices,” the EIA stated in its January STEO.

According to the EIA’s latest forecast, global production of liquid fuels will rise from 100 million barrels per day in 2022 to reach an average of 102.8 million barrels per day in 2024, “driven by large growth in non-OPEC production”.

“However, uncertainty over Russia’s oil supply will persist, particularly in early 2023,” the January STEO noted.

Looking at the global consumption of liquid fuels, the EIA revealed in its latest STEO that it expects an increase from an average of 99.4 million barrels per day in 2022 to 102.2 million barrels per day in 2024.

“Ongoing concerns about global economic conditions as well as the easing Covid-19 restrictions in China, however, increase the uncertainty of the outcomes of our demand forecasts,” the EIA warned in the January STEO.

In a separate report sent to Rigzone this week, Enverus Intelligence Research (EIR) revealed that it was “bullish” on oil prices heading into 2023.

“Oil supply tightness means EIR is bullish on prices heading into 2023, despite considerable economic headwinds that accompany a disjointed Covid-19 recovery, geopolitical crises and a historic tightening phase for G7 monetary policy,” EIR said in a company statement.

“As of December, EIR forecasts Brent at $93 per barrel in 1Q23, rising to $108 in 4Q23,” the company added.

At the time of writing, the price of Brent crude oil is trading at $80.50 per barrel. The Brent price dropped from a close of $85.91 per barrel on December 30 to a close of $77.84 per barrel on January 4 but has since been on an upward trajectory.

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