EIA revises down 2024 oil price forecast
Washington, US – The US Energy Information Administration (EIA) revised down the price of Brent crude for 2024, citing an increase in global oil inventory throughout the year.
In its Short-term Energy Outlook (STEO) released last week, the agency said global oil inventories increased by an average of 700,000 barrels per day (bpd) in 2023, with an upsurge of 800,000 bpd on average between October, the month before the Red Sea attacks began, and January.
The agency predicts that OPEC+ production cuts will lead to global oil inventory withdrawals during February and March, resulting in an average draw of 0.8mn bpd in the first quarter of 2024, putting upward pressure on oil prices in the coming months.
After a period of relatively balanced markets for the rest of the year, the EIA forecasts that the market will gradually return to moderate inventory builds next year, as increasing oil production growth will outpace slowing oil demand growth.
However, the falling inventories in the first quarter of 2024 will increase oil prices into the mid-$80 per barrel range, before slight downward price pressures emerge through the remainder of the year as forecasted.
The EIA forecasts that Brent will reach $82.42 per barrel and the American West Texas Intermediate (WTI) will hit $77.68 per barrel in 2024. These figures were $82.49 and $77.99, respectively, in the previous month's report.
For next year, the agency expects Brent crude to average $79.48 per barrel and WTI to average $74.98 per barrel.
Global oil production is expected to increase by 550,000 bpd in 2024 to 102.30mn bpd and by 1.87mn bpd in 2025 to reach 107.17mn bpd.
The expiration of existing OPEC+ production targets at the end of 2024 will contribute to supply growth, as OPEC is expected to increase crude oil production by 700,000 next year.
However, the agency expects the increase will be limited because Saudi Arabia and other OPEC+ countries will maintain some level of cuts in an attempt to balance markets. NON-OPEC production growth will average 1.2mn bpd in 2025, led by the US, Canada, Brazil, and Guyana.
Having reached a record high in December 2023, US crude oil production saw a slight decline in January 2024 due to weather-related shut-ins.
The country’s production is expected to reach an average of 13.10mn bpd in 2024, up from 12.93mn bpd last year. The figure is also 110,000 bpd lower than the previous month’s prediction.
Next year, crude oil output in the country is expected to reach 13.49mn bpd, down by 500,000 bpd from last month’s prediction.
World oil demand, meanwhile, is anticipated to increase by 2.71mn bpd in 2024 to reach 102.42mn bpd in 2024. Demand is expected to be around 103.71mn bpd in 2025.
EIA forecasts that Brent crude will reach $82.42 per barrel and WTI will hit $77.68 per barrel in 2024. These figures were $82.49 and $77.99, respectively, in the previous month's report