The U.S. Power Info Administration (EIA) lowered its Brent spot value forecast for 2024 and 2025 in its newest brief time period vitality outlook (STEO), which was launched just lately.
In accordance with its September STEO, the EIA now sees the Brent spot value averaging $82.80 per barrel this yr and $84.09 per barrel subsequent yr. In its earlier August STEO, the EIA projected that the Brent spot value would common $84.44 per barrel in 2024 and $85.71 per barrel in 2025.
A quarterly breakdown included within the September STEO confirmed that the EIA is forecasting that the Brent spot value will common $81.89 per barrel within the third quarter of 2024, $81.64 per barrel within the fourth quarter, $83.34 per barrel within the first quarter of subsequent yr, $85 per barrel throughout the second and third quarters of 2025, and $83 per barrel within the fourth quarter.
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In its August STEO, the EIA forecast that the Brent spot value would common $84.06 per barrel within the third quarter of 2024, $85.97 per barrel within the fourth quarter, $88.66 per barrel within the first quarter of 2025, $86.33 per barrel within the second quarter, $85 per barrel within the third quarter, and $83 per barrel within the fourth quarter.
“Though short-term costs have typically been risky this yr, oil costs have largely traded inside a comparatively tight vary,” the EIA mentioned in its September STEO.
“The Brent crude oil spot value averaged $82 per barrel in August, marking the eighth consecutive month the place it averaged between $80 per barrel and $90 per barrel,” it added.
“Regardless of a drop within the Brent spot value to $73 per barrel on September 6, we count on ongoing withdrawals from world oil inventories stemming from OPEC+ manufacturing cuts will push the worth again into that vary comparatively rapidly,” it continued.
Within the STEO, the EIA famous that persistent financial issues have lowered market expectations round world oil demand progress.
“Slowing world financial exercise and lowered gas demand in China, one of many main sources of worldwide oil demand progress, in addition to indicators of slowing U.S. job progress in current months, have restricted any upward value momentum in current months,” the EIA mentioned within the STEO.
“Nonetheless, we nonetheless count on oil costs will rise within the coming months, pushed by ongoing withdrawals from world oil inventories because of OPEC+ manufacturing cuts,” it added.
The OPEC+ manufacturing cuts proceed to trigger much less oil to be produced globally than is being consumed, the EIA highlighted within the STEO.
“Even earlier than OPEC+ introduced that it’ll delay manufacturing will increase till December, we anticipated a major discount in world oil inventories via the top of this yr,” it mentioned.
“We now count on extra oil shall be taken out of inventories than we beforehand anticipated,” it continued.
The EIA identified in its September STEO that it estimates world oil inventories are falling by 0.9 million barrels per day within the third quarter of 2024 and mentioned it expects they are going to lower by greater than 1.0 million barrels per day via the primary quarter of subsequent yr.
“Because of this, we count on Brent costs will rise from $74 per barrel firstly of September to common $82 per barrel in December and $83 per barrel in 1Q25,” the EIA mentioned.
“By mid-2025, we anticipate that the market will progressively return to average stock builds as OPEC+ will increase manufacturing via the yr and as forecast manufacturing progress from nations exterior of OPEC+ begins to outweigh world oil demand progress,” it added.
“We estimate that world oil inventories will improve by a mean of 0.5 million barrels per day within the second half of 2025,” it continued.
The EIA warned within the report that current manufacturing outages in Libya add a brand new supply of uncertainty for crude oil costs within the coming months.
“These outages compound current uncertainties pushed by assaults on oil tankers within the Crimson Sea delivery channel and the chance the battle in Gaza spills into neighboring nations, probably disrupting regional oil manufacturing,” the EIA mentioned.
“Equally, OPEC+ members may additional delay the unwinding of voluntary oil manufacturing cuts now set to start in December. Over the long run, whether or not world oil demand progress will outweigh provide progress from nations exterior of OPEC+ stays a key uncertainty,” it added.
Rystad, Customary Chartered Discuss Oil
In an oil macro replace from Rystad Power International Market Evaluation Director Claudio Galimberti, which was despatched to Rigzone by the Rystad group on September 11, Galimberti famous that, “at APPEC in Singapore … [last] week, it was exhausting to seek out any dealer with a bullish view, even with Brent beneath $70 per barrel”.
“Most had been speaking about costs heading towards $60. However is that justified by the info? Provide and demand fundamentals level to inventory attracts within the second half of the yr, which is incompatible with these expectations,” he added.
“If China’s financial system manages to rebound and OPEC+ maintains compliance, costs can solely transfer upward from right here. What’s wanted is a few constructive information to enhance the sentiment earlier than fundamentals reassert themselves,” he went on to state.
In a report despatched to Rigzone by Customary Chartered Financial institution Commodities Analysis Head Paul Horsnell final Tuesday, analysts on the financial institution, together with Horsnell, mentioned “the downdraft in oil costs has continued”.
“Given the downward momentum and market focus on macro dangers, speculative positioning in crude oil has moved to a bearish excessive, with our money-manager crude oil positioning index falling to -100.0,” they added.
“The web speculative lengthy throughout the 4 Brent and WTI contracts is simply 2.3 p.c of open curiosity; that is the bottom in knowledge going again to the beginning of 2011 and two share factors beneath the pandemic-era low,” they continued.
“Web promoting over the previous week amounted to 108.8 million barrels, bringing cumulative internet promoting over the previous eight weeks to 311.2 million barrels,” they went on to state.
Within the report, the Customary Chartered Financial institution analysts mentioned the earlier time their positioning index reached -100.0 was in December 2023 and added that this was instantly adopted by a pointy rally.
“Nonetheless, in Q2-2023 the index reached -100.0 thrice and the worth low in that cycle was not achieved till per week after the third prevalence,” they mentioned.
“There may be nonetheless some scope for additional internet promoting; whereas the index for ICE Brent is -93.9, that for NYMEX WTI is -51.8 and the speculative long-short ratio for that contract is properly above historic lows,” they warned on the time.
“We expect the present excessive in positioning relies on incorrect expectations of a looming crude oil surplus and the worry of a extreme financial discontinuity; these views may take time to erode however positioning already seems excessive sufficient to skew value dangers to the upside,” they continued.
To contact the writer, electronic mail andreas.exarheas@rigzone.com
