EIA revises up global oil price forecast

New York, US - The US Energy Information Administration (EIA) revised up global crude oil prices for 2021, the EIA announced on Wednesday in its December Short-Term Energy Outlook (STEO).

International benchmark Brent crude averaged US$41.69 a barrel in 2020, and traded within a wide range from US$64 a barrel in January 2020, US$18 a barrel in April and US$50 a barrel in December as a result of significant declines in oil consumption that caused a sharp rise in global oil inventories, the agency explained.

Brent crude oil is now estimated to average US$52.70 a barrel in 2021, recording a 8.59 per cent increase compared to the agency’s forecast last month.

The EIA also forecast that Brent oil will average US$53.44 for 2022.

‘Brent prices rose to a monthly average of US$50 a barrel in December in part because of expectations of future economic recovery based on continued news about the viability of multiple COVID-19 vaccines. In early January, Brent reached the highest levels in ten months after Saudi Arabia announced a onemonth unilateral cut to its crude oil production for February that is in addition to its OPEC+ commitments,’ it said.

American benchmark West Texas Intermediate (WTI) is expected to average US$49.70 for 2021 and US$49.81 next year, the EIA said, explaining that upward price pressures in 2021 would be limited because of high global oil inventory levels and surplus crude oil production capacity.

The agency forecast that OPEC crude oil production would average 27.2mn barrels per day (bpd) in 2021, up from an estimated 25.6mn bpd in 2020.

It said the revision reflects OPEC’s announced potential rises to production targets and production increases in Libya.

According to IEA, global oil consumption and production will rise during 2021 and 2022, and global oil inventories will continue to decline during much of that period.