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Informist, Wednesday, Oct. 9, 2024

 

MUMBAI – The US Energy Information Administration has cut its forecast for crude oil prices through the end of next year, largely due to lower growth in global oil demand. Following the drop in prices in September, the agency has scaled down its forecast for crude oil prices despite a rise early this month, the agency said in its monthly short-term energy outlook.

 

"We now expect Brent will average $78 per barrel in 2025, $7 per barrel less than our forecast from last month," the agency said. Prices fell in September as concerns over growth in global oil demand outweighed declines in oil inventories and the Organization of the Petroleum Exporting Countries' decision to delay production increases until December 2024. However, after recent military actions involving Israel, Lebanon, and Iran, the spot price of Brent crude rose to $79 per barrel on Oct. 4, up 11% from a week ago. However, no oil supplies have been affected by the increased military action in West Asia, and the agency doesn't assume any disruption in its projection. 

 

It anticipates accelerated growth in oil production as OPEC and its allies increase their production, and as production in the US, Guyana, Brazil, and Canada continues to grow. "We forecast oil inventories will increase by an average of almost 600,000 barrels per day in Jul-Dec (2H25) as production growth globally begins to outweigh global oil demand growth," it said.

 

Global production of petroleum and other liquid fuels is forecast to increase by 2.0 million barrels per day in 2025, up from just 500,000 barrels per day this year. "We assume countries outside of OPEC and allies increase production by 1.4 million barrels per day in 2025, while OPEC and allies' production increases by 700,000 barrels per day, after the voluntary cuts reduced OPEC and allies' production by 1.3 million barrels per day this year," it said.

 

The agency estimates that Libya's crude oil production fell by 400,000 barrels per day in September 2024 from nearly 1.2 million barrels in July 2024, before the disruptions began. As of early October, it appears the cause of the disruption has come to a resolution, with affected production potentially restarting in October. The agency now assumes Libya's oil production will rise to an average of 600,000 barrels per day for the rest of this year.

 

Global consumption of liquid fuels is forecast to increase by 900,000 barrels per day in 2024 and 1.3 million barrels per day in 2025. The agency scaled down its forecast for 2024 from September's report due to downward revisions to demand from China. The forecast for 2025 was cut because of downward revisions to demand from the Organisation for Economic Co-operation and Development countries, according to the report.

 

The US agency said China's crude oil demand continued to decline in Jul-Sep. However, the newly announced monetary stimulus measures by the Chinese government could result in higher economic growth and petroleum consumption in 2025. The agency has forecast China's petroleum and liquid fuels consumption to grow by about 100,000 barrels per day in 2024, and 300,000 million barrels per day in 2025. 

 

"We reduced our forecast of total OECD oil consumption by 200,000 barrels per day in 2025 compared with last month's report as a result of weaker expectations for industrial production and manufacturing growth in the US and Canada," it said. 

 

US crude oil production in 2024 is seen slightly lower at 13.22 million barrels per day, compared to 13.25 million barrels per day projected last month. In 2025, production by the world's biggest oil producer is seen at 13.54 million barrels per day, lower than the 13.69 million barrels per day projected last month, the report said.

 

The agency expects global oil production in 2024 to average 102.50 million barrels per day, higher than the previous estimate of 102.18 million barrels per day. Next year, global output is seen slightly higher at 104.54 mln bpd compared with 104.60 mln bpd last month.

 

The agency expects Brent crude oil prices on the Intercontinental Exchange to average $77.59 per bbl in 2025 against its previous forecast of $84.09 per bbl. It also lowered its forecast for Brent prices to $80.89 per bbl this year, against $82.80 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 $76.91 per bbl from last month's projection of $78.80 per bbl. In 2025, the agency expects WTI prices to average $73.13 per bbl compared with its previous estimate of $79.63 per bbl.

 

At 1719 IST, the price of Brent crude on the Intercontinental Exchange was $76.79 per bbl and the price of WTI crude on the NYMEX was $73.12 per bbl.  End

 

US$1 = INR 83.96

 

Reported by Taniva Singha Roy

Edited by Avishek Dutta

 

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