The U.S. Energy Information Administration (EIA) has revealed its latest Brent spot average price forecasts for 2023 and 2024 in its October short term energy outlook (STEO), which was released this week.
According to the STEO, the EIA now sees the Brent spot price averaging $84.09 per barrel this year and $94.91 per barrel next year. In the STEO, the EIA projected that the Brent spot price will average $90.65 per barrel in the fourth quarter of this year, $94.64 per barrel in the first quarter of 2024, $96 per barrel in the second quarter of next year, $95 per barrel in the third quarter, and $94 per barrel in the fourth quarter.
In its previous STEO, which was released in September, the EIA projected that the Brent spot price would average $84.46 per barrel in 2023 and $88.22 per barrel in 2024. In that STEO, the EIA forecast that the commodity would come in at $92.68 per barrel in the fourth quarter of this year, $91 per barrel in the first quarter of 2024, $88 per barrel in the second quarter, and $87 per barrel in both the third and fourth quarters of 2024.
“The Brent crude oil spot price increased over much of the past month before falling below $90 per barrel during the first week of October,” the EIA noted in its October STEO.
“We forecast crude oil prices will rise in the coming months, reflecting our expectations of tightening balances in global oil markets,” it added.
In the STEO, the EIA outlined that the Brent crude oil price averaged $94 per barrel in September, which it pointed out was $8 per barrel higher than in August and $19 per barrel higher than in June.
“Oil prices increased in September after Saudi Arabia extended its voluntary crude oil production cuts through the end of the year and U.S. commercial crude oil inventories fell to the lowest since early 2022 at the end of September,” the EIA said in the STEO.
Supply, Inventories
Global crude oil supply growth has been limited in 2023 because of voluntary production cuts from Saudi Arabia and reduced production targets from other OPEC+ countries, the EIA noted in its October STEO.
“We expect countries within the OPEC+ agreement will have lowered crude oil production by 1.4 million barrels per day in 2023, partly offsetting production growth of 2.7 million barrels per day by non-OPEC+ producers,” the EIA added.
“We forecast that OPEC+ crude oil production will fall by an additional 0.3 million barrels per day on average in 2024. This forecast assumes some extension of voluntary production cuts from Saudi Arabia into 2024 and overall production from OPEC+ countries remaining below targets,” it continued.
“Our current assessment is that global oil inventories are falling by 0.2 million barrels per day in the second half of 2023. Inventory draws in our forecast continue at that pace in the first quarter of 2024 because OPEC+ cuts keep global oil production lower than global oil demand,” it went on to state.
The EIA projected in its report that inventories will be “largely balanced” for the remaining three quarters of 2024, “as global oil consumption growth generally slows while production growth accelerates”.
“As a result, we expect the Brent spot price will average $91 per barrel in 4Q23 and increase to average $96 per barrel in 2Q24 before some modest downward price pressures emerge in 2H24,” the EIA said in the STEO.
“Our forecast for the annual average Brent spot price in 2024 is $95 per barrel, $7 per barrel higher than in last month’s STEO,” it added.
Attacks, Uncertainty
Although the recent attacks on Israel have not affected physical oil markets, they raise the potential for oil supply disruptions and higher oil prices, the EIA said in its latest STEO.
“The situation in Israel began developing after we ran our models, so it remains a source of uncertainty in our forecasts,” the EIA highlighted.
The EIA also noted in its STEO that growth in global oil production remains a key uncertainty in its forecast for next year.
“Current OPEC+ production targets are set to expire at the end of 2024, and we assume that continuing voluntary cuts and other factors will keep actual OPEC+ crude oil production well below targets as the group tries to limit increases in global oil inventories,” the EIA said in the STEO.
“However, should OPEC+ produce closer to target levels than we currently assume, it could reduce prices in 2024,” it added.
“Also, the rate at which U.S. tight oil producers add drilling rigs and improve well-level efficiency is highly uncertain and could cause global oil production to vary significantly from our forecast,” it continued.
“Finally, the global economic outlook remains uncertain, and unexpected changes in GDP growth in the coming months could affect oil demand,” the EIA went on to state.
Additional Forecasts
In a separate report sent to Rigzone this week, Standard Chartered projected that the ICE Brent price would average $98 per barrel in 2024, $109 per barrel in 2025, and $128 per barrel in 2026.
Standard Chartered outlined in the report that it saw the commodity averaging $93 per barrel in the fourth quarter of 2023, $92 per barrel in the first quarter of 2024, $94 per barrel in the second quarter, $98 per barrel in the third quarter, $106 per barrel in the fourth quarter, and $107 per barrel in the first quarter of 2025.
In a report sent to Rigzone on September 26, Standard Chartered projected that the ICE Brent price would average $91 per barrel in 2023.
In another report sent to Rigzone earlier this month, BMI, a Fitch Solutions company, forecast that the Brent oil price would average $83 per barrel this year, $84 per barrel in both 2024 and 2025, and $81 per barrel in both 2026 and 2027.
A Bloomberg Consensus included in that report projected that Brent would average $81 per barrel in 2023, $84 per barrel in 2024, $81 per barrel in 2025, $77 per barrel in 2026, and $72 per barrel in 2027. BMI is a contributor to the Bloomberg Consensus.
In a report sent to Rigzone on September 27, BofA Global Research revealed that it had raised its fourth quarter Brent forecast to $96 per barrel and kept its $90 2024 call.
In another report sent to Rigzone on September 18, Bjarne Schieldrop, the Chief Commodity Analyst at SEB, said “we are highly likely to see Dated Brent moving above $100 per barrel”.
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