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Informist, Wednesday, Aug 7, 2024

 

NEW DELHI – The US Energy Information Administration expects global crude oil prices to rise in the second half of the year despite a fall in recent weeks. Oil prices are likely to be supported due to falling inventories of oil across the globe, the agency said in its monthly Short Term Energy Outlook for August. 

 

"Inventory withdrawals stem in part from ongoing OPEC+ production cuts. Although we expect crude oil prices to rise in the coming months, our forecast for the annual average Brent crude oil price in 2025 is down from a forecast of $88/b (barrel) in our July STEO (Short Term Energy Outlook), owing mostly to reduced oil consumption," the agency said in the report.

 

On Monday, Brent crude prices fell to $75.05 per bbl, its lowest level since December. The fall in prices was due to lacklustre demand growth in China, the world's largest importer of the commodity. 

 

EIA expects Brent crude oil prices on the Intercontinental Exchange to average $84.44 per barrel this year, against $86.37 projected last month. In 2025, the agency expects Brent prices to average $85.71 a bbl, compared with its previous forecast of $88.38.

The agency expects global crude oil inventories to drop by 400,000 bbl per day in Jan-Jun, and are likely to fall by a further 800,000 bpd in the second half of the year. "We expect the Brent crude oil spot price will increase from its current level below $80/b to average $85/b for the remainder of 2024 and $89/b in the first quarter of 2025 (Jan-Mar)," it said.

 

The agency also expects global inventories to fall further in Jan-Mar and a return to moderate builds in mid-2025 is anticipated after the expiration of the voluntary production cuts by certain members of the Organization of the Petroleum Exporting Countries and allies, and as supply growth from countries outside the cartel and its allies begins to outweigh global demand growth.  

 

As for West Texas Intermediate crude on the New York Mercantile Exchange, the US energy agency has also lowered its estimate for 2024 to $80.21 per bbl from last month's projection of $82.03 per bbl. In 2025, the agency expects WTI prices to average $81.21 per bbl compared with its previous estimate of $83.88 a bbl.

 

At 1239 IST, the price of WTI crude was $74.56 a bbl and that of Brent oil was $77.72 a bbl.

 

In 2024, the agency expects global oil production to average 102.36 mln bpd, slightly lower than its previous forecast of 102.43 mln bpd. Next year, global output is seen a tad lower at 104.44 mln bpd compared with 104.60 mln bpd estimated in July.

 

The agency has slightly lowered its estimate for US crude oil production for this year to 13.23 mln bpd from 13.25 mln bpd projected in July. In 2025, production by the world's biggest oil producer is seen at 13.69 mln bpd, marginally higher than 13.77 mln bpd projected last month.

 

The world is expected to consume 1.1 mln bpd more crude oil this year, and a further 1.6 mln bpd in 2025, according to the outlook. Last month, demand growth in 2025 was estimated to be 1.8 mln bpd. "Most of the reduction in our oil consumption forecast is in China, where we expect slowing economic growth will continue to reduce diesel consumption," the energy agency said.  End

 

US$1 = 93.95 rupees

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Sayantan Sarkar

Edited by Akul Nishant Akhoury

 

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