USA EIA Bumps Up Oil Price Forecast

USA EIA Bumps Up Oil Price Forecast
The EIA now sees Brent spot prices averaging $71.38 per barrel in 2021.

The U.S. Energy Information Administration (EIA) has increased its Brent spot average price forecasts for 2021 and 2022, its October short term energy outlook (STEO) has revealed.

The EIA now sees Brent spot prices averaging $71.38 per barrel in 2021 and $71.91 per barrel in 2022. This marks a notable rise from the EIA’s September STEO, which forecasted average Brent spot prices of $68.61 per barrel in 2021 and $66.04 per barrel in 2022.

In its latest STEO, the EIA highlighted that Brent crude oil spot prices averaged $74 per barrel in September, which it noted was up $4 per barrel from August and up $34 per barrel from September last year. The organization also drew attention to the fact that Brent spot prices have risen from their September average to more than $80 per barrel in early October.

“Oil prices have increased over the past year as result of steady draws on global oil inventories, which averaged 1.9 million barrels per day during the first three quarters of 2021,” the EIA stated in its October STEO.

“In addition to sustained inventory draws, prices increased after the October 4 announcement by OPEC+ that the group would keep current production targets unchanged,” the EIA added in its latest STEO report.

In its October STEO, the EIA said it expects Brent prices will remain near current levels for the remainder of 2021, averaging $81 per barrel during the fourth quarter of 2021, which it highlighted is $10 per barrel higher than its previous forecast.

“The higher forecast reflects our expectation that global oil inventories will fall at a faster rate than we had previously expected owing largely to lower global oil supply in late 2021 across a range of producers,” the EIA said.

“In 2022, we expect that growth in production from OPEC+, U.S. tight oil and other non-OPEC countries will outpace slowing growth in global oil consumption and contribute to Brent prices declining from current levels to an annual average of $72 per barrel,” the organization added.

The EIA’s October STEO remains subject to heightened levels of uncertainty related to the ongoing recovery from the Covid-19 pandemic, the organization noted, adding that the STEO assumes U.S. GDP will grow by 5.7 percent in 2021 and by 4.5 percent in 2022. 

As of October 13, 3.58pm CEST, there have been 44.1 million confirmed Covid-19 cases in the U.S., with 710,757 deaths, according to the latest information from the World Health Organization (WHO). As of October 8, a total of 407,615,184 vaccine doses have been administered in the country, the latest WHO data shows.

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