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Informist, Thursday, Dec. 11, 2025

MUMBAI – Growing global crude oil production and lower demand due to the ongoing winter season are expected to accelerate the accumulation of oil inventories, further pushing down the prices, according to the US Energy Information Administration. Brent crude oil prices are expected to fall to an average of $55 per barrel in the first quarter of 2026 and are expected to revolve around the same price for the rest of the year, the agency said in its Short Term Energy Outlook for December released Tuesday.

As for West Texas Intermediate crude oil on the New York Mercantile Exchange, the US energy agency now expects prices to average $65.32 per barrel this year, marginally higher than its previous forecast of $65.15 per barrel. In 2026, the agency expects WTI prices to average $51.42 per barrel, also slightly higher than $51.26 per barrel seen in the previous estimate.

"In 2026, we expect production and consumption to grow at similar rates, but production levels will continue to exceed consumption, further adding to inventories," the agency said. Global crude oil inventory builds are likely to exceed 2 million barrels per day in 2026, which is similar to this year's increase. If inventories keep rising and onshore storage fills up, market participants may be forced to use costly alternatives like floating storage. This shift would cause part of the drop in crude oil prices to reflect the higher marginal cost of storage.

However, the policies of the Organization of the Petroleum Exporting Countries and its allies and China's continued inventory build are expected to limit the fall in crude oil prices, it said. OPEC and allies are expected to produce about 1.3 million barrels per day less than targeted production in 2026. On Nov. 30, OPEC and its allies reaffirmed plans to keep production flat in the first quarter, but left open the potential for future adjustments.

Global liquid fuels production is likely to rise by 3 million barrels per day in 2025 and by more than 1.2 million barrels per day in 2026, the agency said. This rise is expected to come from OPEC and its allies, the US, Brazil, Guyana, and Canada, the agency said. "Together these four countries contribute more than 50% (1.5 million b/d) of total global growth this year and about 60% (0.8 million b/d) in 2026," it said. "Production in South America has been the leading source of growth in 2025 as new offshore vessels have started up ahead of schedule in Brazil and Guyana, with additional projects still in development," it added.

Global liquid fuels consumption is likely to rise by 1.1 million barrels per day in 2025 and 1.2 million barrels per day in 2026. The rise in global liquid fuels consumption is almost entirely driven by non-Organisation for Economic Co-operation and Development countries. China's liquid fuels consumption is expected to rise by 250,000 barrels per day in 2025, 50,000 barrels per day higher from the previous month's outlook, due to upward revisions to expected GDP growth. India's consumption is expected to rise by 70,000 barrels per day this year and 170,000 barrels per day in 2026.

At 1441 IST, the most-active February contract of Brent Crude on the Intercontinental Exchange was down 1.2% at $61.44 per barrel and the most-active January contract of WTI crude on NYMEX was down 1% at $57.74 per barrel.  End

US$1 = INR 90.38

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

Reported by Udita S. Jaiswal

Edited by Ashish Shirke

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