EIA Raises 2021 Oil Price Forecast
The U.S. Energy Information Administration (EIA) has raised its 2021 Brent oil price forecast in its latest short term energy outlook (STEO) report.
The organization now sees Brent spot prices averaging $65.19 per barrel this year, which marks a notable rise from the $62.26 per barrel average forecasted in the organization’s previous STEO released in May. Looking at 2022, the EIA now projects that Brent spot prices will average $60.49 per barrel, which is a slight decrease compared to the $60.74 per barrel forecast made in its May STEO.
The EIA highlighted in its June STEO that Brent crude spot prices averaged $68 per barrel in May, which it noted was $4 per barrel up from April. Brent prices were said to be higher in May as global oil inventories continued to decline.
“In the coming months, we expect that global oil production will increase to match rising levels of global oil consumption,” the EIA said in its latest STEO.
“The rising oil production in the forecast is largely a result of the OPEC+ decision to raise production. We expect rising production will end the persistent global oil inventory draws that have occurred for much of the past year and lead to relatively balanced global oil markets in the second half of 2021,” the EIA added.
The EIA said in its June STEO that it expects Brent prices will remain near current levels in the third quarter of this year, averaging $68 per barrel. However, in 2022, it noted that it expects 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 declining oil prices.
“Based on these factors, we expect Brent to average $60 per barrel in 2022,” the EIA said.
The EIA estimates that 96.2 million barrels per day of petroleum and liquid fuels were consumed globally in May, which it said was an increase of 11.9 million barrels per day from May 2020 but 3.7 million barrels per day less than in May 2019. The organization forecasts that global consumption will average 97.7 million barrels per day in 2021, which it highlighted would be a 5.4 million barrel per day increase from 2020. Consumption is expected to increase by 3.6 million barrels per day in 2022 to average 101.3 million barrels per day.
The EIA forecasts that OPEC crude oil production will average 26.9 million barrels per day in 2021 and 28.7 million barrels per day in 2022. According to its most recent data, U.S. crude oil production averaged 11.2 million barrels per day in March, which was an increase of 1.4 million barrels per day from February. The EIA said the March rise indicates that the production outages caused by the February winter freeze were temporary and that production came back online quickly.
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