The US Energy Information Administration (EIA) has stated in the September Short-Term Energy Outlook (STEO) that it expects the price of Brent crude oil to average $93 a barrel within the remaining quarter of the year, compared to its previous prediction of $88 a barrel.
Joe DeCarolis, the Administrator of the EIA, said in a statement:
“We expect crude oil prices to rise as global oil inventories decrease through the end of this year. High oil prices combined with uncertain economic conditions could lessen global demand for petroleum products through 2024.”
The change has been driven by Saudi Arabia’s decision to extend its voluntary production cut, combined with cuts by other OPEC+ members that are limiting the supply of oil. The EIA forecast envisions this leading to global oil inventories declining by 0.2 million barrels per day (bpd) in the fourth quarter, putting upward pressure on prices. Nevertheless, despite OPEC+ continuing to limit production, growth in production in non-OPEC+ countries should lead to the world’s total liquid fuels production increasing this year and next. For example, ExxonMobil, the oil major behind products like the Mobil DTE hydraulic oil, has a string of projects to come online from offshore Guyana. The EIA also expects US crude oil production to rise to an average of 13.16 million bpd for this year.
The EIA therefore expects global oil inventories to start rising again in the second half of next year, leading to the price of Brent crude relaxing to an average of $87 per barrel.