In its latest Short-Term Energy Outlook, the US Energy Information Administration (EIA) has raised its prediction for average oil prices for both this year and next.
For this year, the EIA now sees Brent crude selling for an average of $87 per barrel this year. With the cuts in crude oil production having been extended by the OPEC+ group, the organisation says it has downgraded its prediction for worldwide growth in oil production this year.
This comes despite growth in non-OPEC+ countries like Brazil, the United States and Guyana, where ExxonMobil, the maker of the Mobil Rarus compressor oil, is bringing a string of projects online following a series of discoveries.
The EIA says it now believes this lower overall growth will lead to significant declines in the world’s oil inventories in the second quarter this year, adding:
“Because of falling inventories, we now expect the Brent crude oil spot price will average $88 per barrel (b) in 2024, up $4/b from our February STEO, and we expect the Brent price will average $87/b this year.”
Following the second quarter, the EIA anticipates that oil prices will remain stable at around $88 per barrel, until the OPEC+ production cuts expire and allow inventories to start building again. This, in turn, should put slight downward pressure on prices.
Nevertheless, the EIA points to significant uncertainty in its forecast, saying that any disruption in Middle East oil production could affect global oil balances and place further upward pressure on prices.
