The U.S. Energy Information Administration (EIA) has marginally cut its Brent and West Texas Intermediate (WTI) oil price forecasts for both 2020 and 2021, the organization’s latest short-term energy outlook (STEO) report has revealed.
The EIA now expects the Brent and WTI spot price to average $41.19 per barrel and $38.76 per barrel this year, respectively. In 2021, the Brent spot price is expected to average $47.07 per barrel and the WTI spot price to average $44.72 per barrel.
In its previous STEO, the EIA forecasted that the Brent spot price would average $41.90 per barrel this year and $49.07 per barrel in 2021. The WTI spot price was projected to average $38.99 per barrel in 2020 and $45.07 per barrel in 2021.
“EIA estimates that global oil markets have shifted from global liquid fuels inventories building at a rate of 7.3 million barrels per day in the second quarter of 2020 to drawing at a rate of 3.1 million barrels per day in the third quarter,” the EIA stated in its latest STEO.
“EIA expects inventory draws in the fourth quarter to be three million barrels per day before markets become more balanced, with inventory draws of 0.3 million barrels per day on average in 2021,” the EIA added in the report.
“Despite expected inventory draws in the coming months, EIA expects high inventory levels and surplus crude oil production capacity will limit upward pressure on oil prices,” the EIA continued.
In its October STEO, the EIA highlighted that Brent crude spot prices averaged $41 per barrel in September, which it noted was down $4 per barrel from the average in August. The decrease in oil prices coincided with slowing increases in global oil demand, according to the EIA, which said month-over-month consumption rose by one million barrels per day on average during August and September compared with an increase of 4.1 million barrels per day from May through July.
Earlier this week, Fitch Solutions revealed that it had maintained its Brent oil price forecast to 2024. Analysts at the company expect Brent to average $44 per barrel this year, $51 per barrel in 2021, $53 per barrel in 2022, $55 per barrel in 2023 and $58 per barrel in 2024. The forecast is the same as Fitch Solutions’ September oil price outlook.
Last month, a Dallas Fed survey revealed that the majority (over 40 percent) of executives from 162 oil and gas firms outlined that they expected the price of WTI to come in at between $40 per barrel and $44.99 per barrel at the end of the year.
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