The US Energy Information Administration (EIA) has forecasted in its March Short-Term Energy Outlook that crude oil prices will rise in April, due in part to continuing OPEC+ production cuts.
In February, Texas was affected by unusually cold conditions that, in turn, affected shale operators in the Permian Basin – such as ExxonMobil and BP, the maker of Castrol spindle oil – with them having to deal with power outages, frozen equipment and transport disruptions. The EIA says this, combined with the OPEC+ cuts, led to a 3.7 million barrels per day (bpd) draw on global crude oil inventories, the biggest since December 2022.
The EIA says more upward pressure on oil prices came to bear following the OPEC+ announcement to largely maintain its production cuts, triggering a brief surge in Brent futures to over $70 per barrel. It now expects global inventories to decline by 1.8 million bpd in the first quarter and 0.6 million bpd in the second quarter, adding:
“The sustained OPEC+ production curtailment through April suggests that supply will remain constrained in the near term, even as demand continues to increase. As a result, EIA expects that further inventory withdrawals to meet rising crude oil demand will keep crude oil prices elevated through at least the end of April.”
Despite this, it expects downward pressure to bring crude oil prices to a little under $60 until the end of next year, although it points to key uncertainties both on the supply and demand sides.