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Informist, Wednesday, Dec. 11, 2024

 

MUMBAI – The US Energy Information Administration sees global oil production rising by 1.6 million barrels per day in 2025 and expects almost 90% of the growth to come from countries that are not a part of the Organization of Petroleum Exporting Countries and allies. The growth in oil production will mostly be from non-OPEC countries because of the ongoing production restraint by the OPEC and its allies, the agency said in its monthly Short Term Energy Outlook for December.

 

Eight members of the OPEC and its allies--Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria, and Oman--have extended their voluntary production cuts of crude oil till the end of March. These output cuts were set to begin in January. "Our forecast assumes OPEC+ will generally raise production in line with the new target levels through much of 2025, as the announced targets align with the production that we expect will keep oil markets relatively balanced next year," the agency said.

 

Global liquid fuels production rose by 600,000 barrels per day in 2024, the agency said. Production outside of OPEC and its allies rose 1.9 million barrels per day this year, led by growth in the US, Canada, and Guyana. However, this growth was partly offset as production from OPEC and its allies fell by 1.3 million barrels per day.

 

EIA expects the extension of production cuts by the cartel will cause inventories to fall by 700,000 barrels per day in the first quarter of 2025. However, the subsequent ramp up in production and continued growth in supply outside of OPEC and its allies will lead to an average inventory build-up of 100,000 barrels per day over the remainder of 2025.

 

"We forecast that inventory builds will put some downward pressure on crude oil prices later in 2025, with Brent falling from an average of $74/b in 1Q25 (Jan-Mar) to an average of $72/b in 4Q25 (Oct-Dec). In our forecast, the 2025 annual average Brent price is $74/b, down from an average of $80/b this year," the agency said. EIA revised the Brent Crude oil prices to $74 per barrel in 2025 against $76 projected last month.

 

As for West Texas Intermediate crude on the New York Mercantile Exchange, the US energy agency has reduced its estimate for 2024 to $76.51 per barrel from last month's projection of $77 per barrel. For 2025, the agency expects West Texas Intermediate crude prices to average $69.12 per barrel compared with its previous estimate of $71.60 per barrel.

 

The volatility and risk premium associated with the conflict in West Asia moderated for a while before rising again following the ouster of Syrian President Bashar al-Assad. An escalation in the regional conflict has the potential to reduce oil supplies and regional political uncertainty can increase the risk premium, the agency said.

 

Global consumption of liquid fuels is forecast to rise by 900,000 barrels per day in 2024 and 1.3 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 200,000 barrels per day in 2024 and by more than 300,000 barrels 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. "We estimate that OECD (Organisation for Economic Co-operation and Development) oil consumption will be relatively unchanged across 2024 and 2025, with a slight decline this year and a slight increase next year, the agency said.

 

The EIA expects net crude oil imports to the US to fall to 1.9 million barrels per day in 2025 from 2.5 million barrels per day this year due to a combination of rising domestic production and decreasing US refinery runs. US crude oil production in 2024 is seen marginally higher at 13.24 million barrels per day, compared with 13.23 million barrels per day projected last month. In 2025, production by the world's biggest oil producer is seen at 13.52 million barrels per day, the report said.

 

At 1157 IST, the price of Brent Crude on the Intercontinental Exchange was $72.57 per barrel and the price of West Texas Intermediate crude on NYMEX was $68.96 per barrel.  End

 

US$1 = INR 84.83

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

 

Reported by Ashutosh Pati

Edited by Akul Nishant Akhoury

 

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