USA EIA Slashes 2023 and 2024 Brent Oil Price Forecasts

The U.S. Energy Information Administration (EIA) cut its Brent spot price average forecasts for 2023 and 2024 in its latest short term energy outlook (STEO), which was released on May 9.

According to the latest STEO, the EIA now sees the Brent spot price averaging $78.65 per barrel this year and $74.47 per barrel next year. In its previous STEO, which was published in April, the EIA projected that the Brent spot price would average $85.01 per barrel in 2023 and $81.21 per barrel in 2024.

On a quarter by quarter basis, the EIA sees the Brent spot price averaging $77.56 per barrel in the second quarter of this year, $78 per barrel in the third and fourth quarters of 2023, $77 per barrel in the first quarter of 2024, $75 per barrel in the second quarter of next year, $74 per barrel in the third quarter of next year, and $72 per barrel in the fourth quarter of 2024, the latest STEO showed.

In its May STEO, the EIA noted that the Brent crude oil spot price fell from an average of $85 per barrel in April to close at $73 per barrel on May 4. At the time of writing, the price of Brent is currently trading at $76.93 per barrel.

“At the beginning of April, OPEC and partner countries (OPEC+) announced a cut to crude oil production of 1.2 million barrels per day through the end of 2023, which increased crude oil prices on expectations of tightening oil supplies,” the EIA said in its May STEO.

“However, ongoing considerations about weakening global economic conditions, perceived risk around the global banking sector, and persistent inflation outweighed the initial increase in oil prices and have led to lower prices,” the EIA added.

“Although demand growth for liquid fuels faces downside risks through the end of 2024, we expect the seasonal rise in oil consumption and a drop in OPEC crude oil production to put some upward pressure on crude oil prices in the coming months,” the EIA continued.

The organization revealed in its May STEO that it is forecasting global liquid fuels consumption to increase by 1.6 million barrels per day in 2023 and by 1.7 million barrels per day in 2024. Most expected liquid fuels demand growth is in non-OECD Asia, led by China and India, the EIA noted in the STEO.

“We expect this demand growth will bring the global oil market into balance between the third quarter of 2023 and 1Q24 and push the Brent price from current levels back to between $75 per barrel and $80 per barrel,” the EIA said in the May STEO.

“Beginning in 2Q24, we expect consistent global oil inventory builds over the rest of the forecast period as global oil production outpaces global oil demand, putting downward pressure on crude oil prices,” the EIA added.

“We forecast global oil inventories will grow by 0.3 million barrels per day in 2024, and we forecast the Brent crude oil spot price to average $74 per barrel in 2024, $7 per barrel lower than in last month’s STEO,” the EIA went on to state.

Standard Chartered, BofA

In a separate report sent to Rigzone on May 9, Standard Chartered revealed that it is currently projecting that the Brent price will average $91 per barrel this year, $98 per barrel next year, and $109 per barrel in 2025.

That report highlighted that the company sees the Brent price averaging $88 per barrel in the third quarter of this year, $93 per barrel in the fourth quarter of 2023, $92 per barrel in the first quarter of 2024, $94 per barrel in the second quarter of 2024, and $98 per barrel in the third quarter of next year.

“We think speculative swings have become excessive, relative to underlying news flow and fundamental data,” analysts at Standard Chartered stated in the report.

“Whether this is caused by an over-reliance on similar algorithms, or on similar analysts is moot; the result is the generation of unnecessary volatility,” the analysts added.

“The scale of speculative shorting over the past two weeks is difficult to justify in terms of either current oil fundamentals or the macro environment, in our view,” the analysts went on to state.

In another report sent to Rigzone this week, BofA Global Research revealed that it had cut its average Brent forecast for this year.

“With negative macro trends poised to amplify demand weakness ahead, we cut our average Brent crude oil price forecast to $80 per barrel in 2023,” BofA Global Research stated in the report.

“Even then, we leave our 2024 Brent crude oil forecast at $90 per barrel because we believe OECD demand will eventually improve while OPEC+ will likely keep proactively and pre-emptively managing supply,” the company added in the report.

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