USA EIA Raises Brent Oil Price Forecast

USA EIA Raises Brent Oil Price Forecast
The U.S. Energy Information Administration has raised its 2023 Brent spot average price forecast.

The U.S. Energy Information Administration (EIA) has raised its 2023 Brent spot average price forecast by $4.67, the organization’s latest short term energy outlook (STEO) has revealed.

The EIA’s May STEO sees the 2023 Brent spot price averaging $97.24 per barrel. Its previous STEO released in April saw the 2023 Brent spot price average coming in at $92.57 per barrel. For 2022, the EIA’s May STEO projects that the Brent spot price will average $103.35 per barrel, which is two cents lower than the 2022 forecast in the EIA’s April STEO.

The Brent oil spot price averaged $105 per barrel in April, according to the latest EIA STEO, which noted that this was a $13 per barrel decrease from March.

“Although down from March, crude oil prices remain above $100 per barrel following Russia’s full-scale invasion of Ukraine,” the EIA noted in its May STEO.

“Sanctions on Russia and other independent corporate actions contributed to falling oil production in Russia and continue to create significant market uncertainties about the potential for further oil supply disruptions,” the EIA added.

“These events occurred against a backdrop of low oil inventories and persistent upward oil price pressures,” the EIA continued.

In its May STEO, the EIA highlighted that its price forecast is “highly uncertain” and added that actual price outcomes will largely depend on the degree to which existing sanctions imposed on Russia, any potential future sanctions, and independent corporate actions affect Russia’s oil production or the sale of Russia’s oil in the global market.

“We completed this outlook on May 5, therefore it does not include an EU ban on oil imports from Russia. However, the bans being reported at the time of writing would likely contribute to tighter oil balances and higher oil prices than our current forecast,” the EIA stated.

“In addition, the degree to which other oil producers respond to current oil prices and the effects macroeconomic developments might have on global oil demand will be important for oil price formation in the coming months,” the EIA added.

The organization also warned that, because oil inventories are currently low, it expects downward oil price pressures will be limited and market conditions will exist for significant price volatility.

At the time of writing, the price of Brent crude oil stood at $105.62 per barrel. The price of the commodity has fluctuated recently, closing at $113.16 per barrel on April 18, $102.32 per barrel on April 25, $112.39 per barrel on May 6, and $102.46 per barrel on May 10. This time last year, the price of Brent stood at around the $67 per barrel mark.

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