The U.S. Vitality Data Administration (EIA) minimize its common Brent oil spot value forecast for 2025 and 2026 in its newest quick time period power outlook (STEO), which was launched on Could 6.
Based on that STEO, the EIA sees the Brent spot value averaging $65.85 per barrel this 12 months and $59.24 per barrel subsequent 12 months. In its earlier STEO, which was launched in April, the EIA projected that the Brent spot value would common $67.87 per barrel in 2025 and $61.48 per barrel in 2026.
The EIA’s newest STEO sees the commodity averaging $65.04 per barrel within the second quarter of this 12 months, $62 per barrel within the third quarter, $61 per barrel within the fourth quarter, $60 per barrel throughout the primary and second quarters of subsequent 12 months, $59 per barrel within the third quarter of 2026, and $58 per barrel within the fourth quarter.
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In its April STEO, the EIA forecast that the Brent spot value would are available at $66.33 per barrel within the second quarter of 2025, $65.67 per barrel within the third quarter, $64 per barrel within the fourth quarter, $63 per barrel within the first quarter of subsequent 12 months, $62 per barrel within the second quarter, $61 per barrel within the third quarter, and $60 per barrel within the fourth quarter of 2026.
“The Brent crude oil spot value averaged $68 per barrel in April, $5 per barrel decrease than in March,” the EIA highlighted in its newest STEO.
“Crude oil costs fell for the third consecutive month, pushed primarily by expectations of decrease world oil demand development following the implementation of latest tariffs from the US and its largest buying and selling companions,” it added.
“In April, OPEC+ members additionally reaffirmed and accelerated their deliberate manufacturing will increase, including to expectations that world oil inventories will develop and put extra downward strain on oil costs,” it continued.
In its Could STEO, the EIA famous that crude oil costs have been decrease this 12 months than it anticipated in its January 2025 STEO launch, “which largely displays decrease expectations for world oil demand development each amongst market contributors and in our forecast”.
“For the reason that January launch, we’ve decreased our expectations for world oil demand by a complete of 0.5 million barrels per day all through the forecast interval, whereas we’ve lowered the Brent crude oil value forecast by $8 per barrel on common,” the EIA mentioned in its newest STEO.
“With much less oil being consumed this 12 months, oil inventories have risen. We estimate about 0.3 million barrels per day of oil was put into stock throughout the first 4 months of 2025,” it added.
“In our January outlook, we had anticipated inventories to fall by greater than 0.2 million barrels per day over this era. Perceptions of oversupply amongst oil market contributors additionally mirror manufacturing development from non-OPEC producers, together with introduced manufacturing will increase from OPEC+,” it continued.
“Along with our decrease forecast for world oil demand in contrast with January, uncertainty about tariff charges and the diploma to which these tariffs will have an effect on financial development and, in flip, oil demand development has additionally led to a rise in short-term value volatility,” the EIA went on to state.
The EIA additionally acknowledged within the STEO that top ranges of implied volatility recommend appreciable market uncertainty. It highlighted that implied volatility is “a measure of market contributors’ expectations for the vary of crude oil futures value adjustments”.
“Since early April, crude oil implied volatility has averaged greater than 35 %, based mostly on futures and choices contract knowledge from the CME Group, with day by day Brent crude oil implied volatility reaching as excessive as 39 % on April 8,” the EIA famous within the Could STEO.
“Except intervals of heightened dangers of provide disruptions from geopolitical occasions – reminiscent of considerations over the potential for widening battle within the Center East that occurred final October – implied volatility has usually been lower than 30 % because the starting of 2024,” it added.
“The latest enhance in implied volatility has been largely pushed by considerations of an financial slowdown or recession, moderately than any danger of provide disruption. Because of this, the elevated volatility has been mirrored primarily in downward oil value actions over latest weeks,” it continued.
In its Could STEO, the EIA mentioned it anticipates that world oil inventories will begin to enhance in 2025, “rising 0.5 million barrels per day on common within the second quarter of 2025 earlier than rising by 0.7 million barrels per day in 4Q25”. The EIA highlighted within the report that it expects world oil inventories “to develop on common by 0.4 million barrels per day in 2025 and speed up to 0.8 million barrels per day on common in 2026”.
“Given our expectation that oil inventories will accumulate over the following a number of quarters, we forecast that Brent crude oil costs will usually decline all through the forecast interval,” the EIA mentioned in its Could STEO.
“As world oil inventories start to develop, we anticipate Brent crude oil costs will fall from a median of $76 per barrel in 1Q25 to a median of $61 per barrel by 4Q25 and can common $59 per barrel total subsequent 12 months,” it added.
The EIA went on to warn within the STEO that vital uncertainty stays in its value forecast.
“The impact that new or extra tariffs may have on world financial exercise and related oil demand continues to be extremely unsure and will weigh closely on oil costs going ahead,” the EIA mentioned.
Rigzone has contacted the White Home and OPEC for touch upon the EIA’s Could STEO. The White Home and OPEC haven’t responded to Rigzone on the time of writing.
To contact the writer, electronic mail andreas.exarheas@rigzone.com
