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Informist, Wednesday, Sep 11, 2024

 

MUMBAI – The US Energy Information Administration expects crude oil prices to rise in the coming months, driven by continuing withdrawals from global oil inventories because of the extension of production cuts by the Organization of the Petroleum Exporting Countries and allies until December. "The OPEC+ production cuts continue to cause less oil to be produced globally than is being consumed," the agency said in its monthly Short Term Energy Outlook for September.

 

"Despite a drop in the Brent spot price..., we expect ongoing withdrawals from global oil inventories stemming from OPEC+ production cuts will push the price back into that range relatively quickly," the US agency said. OPEC and its allies last week agreed to extend their voluntary production cuts till the end of November. The cuts were set to expire at the end of September.

 

The agency estimates that global oil inventories have been falling by 900,000 bpd during the current September quarter, and expects these to decrease by more than 1 mln bpd through Jan-Mar of 2025. "By mid-2025, we anticipate that the market will gradually return to moderate inventory builds as OPEC+ increases production through the year and as forecast production growth from countries outside of OPEC+ begins to outweigh global oil demand growth," the agency said in the report.

 

The agency expects Brent crude oil prices on the Intercontinental Exchange to average $84.09 per bbl in 2025 against its previous forecast of $85.71 per bbl. It also lowered its forecast for Brent prices to $82.80 per bbl this year, against $84.44 projected last month.

 

As for West Texas Intermediate crude on the New York Mercantile Exchange, the US energy agency has also lowered its estimate for 2024 to $78.80 per bbl from last month's projection of $80.21 per bbl. In 2025, the agency expects WTI prices to average $79.63 per bbl compared with its previous estimate of $81.21 per bbl.

 

At 1421 IST, the price of Brent crude on the Intercontinental Exchange was $70.33 per bbl and the price of WTI crude on the NYMEX was $66.98 per bbl.

 

Brent crude prices fell to $68.68 per bbl on Tuesday, their lowest level since December 2021, on the back of concerns about poor demand from top importer China, and as OPEC revised downwards its forecast for growth in global oil demand for both 2024 and 2025. The cartel on Tuesday trimmed its forecast for growth in global oil demand in 2024 by nearly 100,000 bpd and for 2025 by 40,000 bpd. 

 

The agency has slightly increased its estimate for US crude oil production for this year to 13.25 mln bpd from 13.23 mln bpd projected last month. In 2025, production by the world's biggest oil producer is seen at 13.67 mln bpd, marginally lower than the 13.69 mln bpd projected last month.

 

The agency expects global oil production in 2024 to average 102.18 mln bpd, lower than the previous estimate of 102.36 mln bpd. Next year, global output is seen slightly higher at 104.60 mln bpd compared with 104.44 mln bpd last month.

 

The world is expected to consume 900,000 bpd more crude oil this year, down 200,000 bpd from last month's forecast. In 2025, global consumption of crude oil will increase by 1.5 mln bpd, down 100,000 bpd from the forecast in August, according to the outlook.

 

The agency expects petroleum and liquid fuels consumption in China to grow by 100,000 bpd in 2024 and 300,000 bpd in 2025. "We revised our forecast petroleum consumption growth in China for 2024 and 2025 down because of slower economic activity as well as new monthly statistics showing a slowdown in diesel demand, jet fuel consumption, and crude oil refinery runs in China," the agency said.  

 

The duration of the recent disruptions to crude oil production in Libya is a key uncertainty for the oil market for the rest of the year, the agency said. It has estimated oil production in Libya to average 600,000 bpd for the remainder of the year. Crude oil production in Libya fell to 400,000 bpd by the end of August from 1.1 mln bpd in the first half of the year.  End

 

US$1 = 83.96 rupees

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

 

Reported by Ashutosh Pati

Edited by Rajeev Pai

 

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