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Informist, Thursday, Nov. 14, 2024

MUMBAI – The US Energy Information Administration expects global oil inventories to fall over the next few months owing to voluntary production cuts by the Organization of Petroleum Exporting Countries and allies and continuing geopolitical risks. Global oil inventories are expected to have fallen by 900,000 barrels per day in the third quarter of 2024, and the agency expects them to fall an average of 300,000 barrels per day in the fourth quarter of 2024 and the first quarter of 2025.

As a result, Brent crude oil prices are likely to rise to an average of $78 per barrel in the first quarter of 2025 from $72 per barrel on Nov. 11, the agency said.

However, global oil inventories will start rising from the second quarter of 2025 as production increases by OPEC and its allies and supply growth from countries outside the cartel outweigh global oil demand growth, the agency said. It has cut its forecast for crude oil prices in 2025 as a result of the expected rise in stocks.

Global oil inventories will rise by an average of 400,000 barrels per day in the second quarter of 2025, and the rise will accelerate to 600,000 barrels per day in the second half of 2025, the agency said in its monthly short-term energy outlook.

"We forecast that inventory builds will put downward pressure on crude oil prices..., the Brent price averages $76/b for the full year of 2025," it said. The agency had forecast Brent crude oil to average $78 per barrel in 2025 in its previous monthly outlook.

Although the volatility and risk premium associated with the conflict in West Asia has moderated in recent weeks, the duration and severity of the conflict remains uncertain, as does the potential for escalation to reduce oil supplies, it said.

Global production of petroleum and other liquid fuels is forecast to rise by 120,000 barrels per day from last month's estimate to 102.62 million barrels per day in 2024. Next year, global output is seen slightly higher at 104.66 million barrels per day from last month's estimate of 104.54 million barrels per day.

Global consumption of liquid fuels is forecast to rise by 1 million barrels per day in 2024 and 1.2 million barrels per day in 2025, with India leading global oil demand growth, the report said. Consumption of liquid fuels in India is expected to rise by 300,000 barrels per day in 2024 as well as in 2025, driven by rising demand for transportation fuels.

The agency expects China's petroleum and liquid fuels consumption to grow by less than 100,000 barrels per day in 2024 and around 300,000 barrels per day in 2025. "In China, rapidly expanding electric vehicle ownership, rising use of liquefied natural gas for trucking goods, and decelerating economic growth have limited consumption growth for transportation fuels," it said.

US crude oil production in 2024 is seen marginally higher at 13.23 million barrels per day, compared to 13.22 million barrels per day projected last month. In 2025, production by the world's biggest oil producer is seen slightly lower at 13.53 million barrels per day, the report said.

The agency expects Brent Crude prices on the Intercontinental Exchange to average $76.06 per barrel in 2025 against its previous forecast of $77.59 per barrel. It slightly increased its forecast for Brent Crude prices to $80.95 per barrel this year, against $80.89 per barrel projected last month.

As for West Texas Intermediate crude on the New York Mercantile Exchange, the US energy agency has raised its estimate for 2024 to $77 per barrel from last month's projection of $76.91 per barrel. In 2025, the agency expects West Texas Intermediate crude prices to average $71.60 per barrel compared with its previous estimate of $73.13 per barrel.

At 1716 IST, the price of Brent Crude on the Intercontinental Exchange was $72.69 per barrel and the price of West Texas Intermediate crude on NYMEX was $68.74 per barrel.  End

US$1 = INR 84.39

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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