USA EIA Reveals New Oil Price Forecast

USA EIA Reveals New Oil Price Forecast
The United States Energy Information Administration kept its Brent spot average prices for 2021 and 2022 flat month on month.

The United States Energy Information Administration (EIA) kept its Brent spot average prices for 2021 and 2022 flat month on month, the organization’s latest Short Term Energy Outlook (STEO) has revealed.

According to its August STEO, the EIA now sees the Brent spot price averaging $68.71 per barrel this year and $66.04 per barrel next year. The EIA’s July STEO forecasted that Brent spot prices would average $68.78 per barrel in 2021 and $66.64 per barrel in 2022.

In its latest STEO, the EIA highlighted that Brent crude oil spot prices averaged $75 per barrel in July, which it noted was up $2 per barrel from June and up $25 per barrel from the end of 2020.

“Brent prices have been rising this year as result of steady draws on global oil inventories, which averaged 1.8 million barrels per day (MMbpd) during the first half of 2021 and remained at almost 1.4 MMbpd in July,” the EIA stated in its August STEO.

“We expect Brent prices will remain near current levels for the remainder of 2021, averaging $72 per barrel from August through November. However, in 2022, we expect that continuing growth in production from OPEC+ and accelerating growth in U.S. tight oil production - along with other supply growth - will outpace decelerating growth in global oil consumption and contribute to Brent prices declining to an average of $66 per barrel in 2022,” the EIA added in the STEO.

The EIA forecasts that OPEC crude oil production will average 26.5 MMbpd in 2021, which it highlights is up from 25.6 MMbpd in 2020. The organization expects OPEC crude oil production will rise to an average of 28.7 MMbpd next year. Looking at U.S. crude oil production, the EIA’s most recent monthly data shows this output stood at 11.2 MMbpd in May. The EIA said it expects production to be relatively flat through October before it starts rising in November and December and throughout 2022. U.S. crude oil production for next year averages 11.8 MMbpd, up from 11.1 MMbpd in 2021, according to the EIA.

The EIA noted that its latest STEO remains subject to heightened levels of uncertainty related to the ongoing recovery from the Covid-19 pandemic. The organization says its forecast assumes continuing economic growth and increasing mobility and adds that any developments that would cause deviations from these assumptions would likely cause energy consumption and prices to deviate from its forecast.

Confirmed cases of Covid-19 have grown, globally, for the past seven consecutive weeks, according to the latest information from the World Health Organization (WHO). The United States alone has seen rising cases for the same number of consecutive weeks, as well as rising numbers of Covid-19 deaths for the past two consecutive weeks, WHO figures show.

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