USA EIA Reveals Latest Oil Price Forecast

The U.S. Energy Information Administration (EIA) has revealed its latest Brent oil price forecast in the February edition of its short term energy outlook (STEO), which was released late Tuesday.

According to the STEO, the EIA sees the Brent spot average coming in at $83.63 per barrel in 2023 and $77.57 per barrel in 2024. In its previous STEO, which was released in January, the EIA projected that the Brent spot price would average $83.10 per barrel in 2023 and $77.57 per barrel in 2024.

“Last month, we highlighted oil demand in China and oil production in Russia as two of the main uncertainties in the oil market this year, and we have revised our outlook for both in this month’s forecast,” the EIA stated in its latest STEO.

“The revisions result from China relaxing Covid restrictions, which have increased our forecast of oil demand growth. At the same time, more oil was produced in Russia than we anticipated during January, and we raised our forecast for Russia’s oil production through the end of 2024. We have also lowered our forecast for oil production in OPEC because of rising global oil inventories,” the EIA added.

“These changes have largely offset each other in our forecast global balances, and beyond the first quarter of 2023, we have left our crude oil price forecast largely unchanged from last month’s outlook,” the EIA continued.

In its February STEO, the EIA highlighted that it expected the Brent spot price will average $85 per barrel in the first half of 2023 and $82 per barrel in the second half of the year. The Brent crude oil spot price averaged $82 per barrel in January, the STEO noted, adding that this was about $2 per barrel higher than the average in December 2022.

“Oil prices rose during January in part because of the expectation of increasing oil demand as a result of relaxing Covid-19 restrictions and increasing mobility in China,” the February STEO stated.

“Perceptions of a less severe recession and some improving macroeconomic conditions also likely contributed to rising crude oil prices over the past month,” the STEO added.

Standard Chartered, Fitch Solutions, Current Price

A Standard Chartered commodity roadmap report sent to Rigzone on February 7 showed that the company projected Brent would hit $91 per barrel in 2023, $98 per barrel in 2024, and $109 per barrel in 2025. The report outlined that the company saw Brent hitting $90 per barrel in the second quarter of this year, $88 per barrel in the third quarter, and $93 per barrel in the fourth quarter.

Standard Chartered sees the Brent price coming at $92 per barrel in the first quarter of 2024 and $94 per barrel in the second quarter of next year, according to the report.

In a separate report sent to Rigzone recently, Fitch Solutions Country Risk & Industry Research projected that Brent crude oil would average $95 per barrel in 2023, $88 per barrel in both 2024 and 2025, and $85 per barrel in both 2026 and 2027. The price projections to 2026 are unchanged from a previous Fitch Solutions’ oil price outlook report sent to Rigzone at the beginning of December 2022, which did not have any price projections for 2027.

At the time of writing, the price of Brent is trading at $84.60 per barrel. The commodity dropped from a settlement of $87.47 per barrel on January 26 to a close of $79.94 per barrel on February 3, before rising to a close of $83.69 per barrel on February 7.

Oil soared past $100 per barrel for the first time in years in February 2022 as Russian forces escalated a conflict with Ukraine. The Brent price went on to close above $120 per barrel on several occasions last year, with the last of those coming in June 2022.

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