The U.S. Power Info Administration (EIA) lowered its 2024 Brent spot worth forecast in its newest brief time period power outlook (STEO), which was launched this week.
In keeping with its June STEO, the EIA now sees the Brent spot worth averaging $84.15 per barrel this yr. In its earlier Could STEO, the EIA projected that the Brent spot worth would common $87.79 per barrel in 2024. The 2025 Brent spot worth forecast stood at $85.38 per barrel in each STEOs.
In its newest outlook, the EIA projected that the Brent spot worth will common $83.71 per barrel within the second quarter of 2024, $83.25 per barrel within the third quarter, and $86.64 per barrel within the fourth quarter. The EIA’s earlier STEO anticipated the commodity to return in at $89.30 per barrel within the second quarter, $90 per barrel within the third quarter, and $88.67 per barrel within the fourth quarter.
- Advertisement -
The Brent spot worth averaged $82.96 per barrel within the first quarter of 2024 and $82.41 per barrel general in 2023, in response to each STEOs.
The EIA famous in its newest STEO that the Brent crude oil spot worth averaged $82 per barrel in Could, which it highlighted was down $8 per barrel from April. Each day spot costs additionally initially fell following the OPEC+ announcement on June 2, closing at $78 per barrel on June 6, the EIA acknowledged in its report.
“The extension of OPEC+ cuts via 3Q24 led us to cut back our forecast for OPEC+ oil manufacturing for the remainder of 2024,” the EIA stated within the report.
“We anticipate much less OPEC+ manufacturing for the remainder of this yr will trigger Brent costs to rise to a mean of $85 per barrel throughout the second half of 2024 (2H24). Due to much less OPEC+ manufacturing, we anticipate extra oil might be withdrawn from world inventories in 2H24 than we did final month,” it added.
“Regardless of extra stock attracts on this month’s forecast, we lowered our expectation for the annual common Brent worth in 2024 in contrast with the Could STEO to replicate the decrease start line for the forecast ensuing from the current worth decline,” it continued.
The EIA famous in its June STEO that, in its Could outlook, it had “assumed OPEC+ would start to calm down some voluntary manufacturing cuts starting in 3Q24”.
“We now anticipate OPEC+ is not going to start enjoyable voluntary cuts till 4Q24, in step with the group’s current announcement,” it added.
“Though crude oil costs initially fell following the OPEC+ announcement, we anticipate the extension of all voluntary cuts via 3Q24 will trigger world oil inventories to proceed falling via 1Q25 and put upward strain on oil costs over that interval,” it went on to state.
World oil inventories fell by an estimated 0.3 million barrels per day within the first half of 2024, the EIA stated in its June STEO, including that it expects they’ll lower by a mean of 0.6 million barrels per day from 3Q24 via 1Q25.
“Following the beginning of the phaseout of voluntary OPEC+ provide cuts in 4Q24 and supported by the continued provide development from nations outdoors of OPEC+, we anticipate development in world oil provide will outweigh development in world oil demand development, returning the market to reasonable stock builds for many of 2025,” the EIA stated.
“We forecast that world oil inventories will start rising at a mean of 0.4 million barrels per day in 2Q25 and can enhance by 0.6 million barrels per day within the second half of 2025,” it added.
“In consequence, we anticipate oil costs will enhance to a mean of $87 per barrel in 4Q24 and $88 per barrel in 1Q25. As world oil inventories rise throughout most of 2025, we forecast the Brent crude oil worth will step by step fall to a mean of $83 per barrel by 4Q25,” it continued.
Oil Value Undershoot Corrected
In a report despatched to Rigzone by Normal Chartered Financial institution Commodities Analysis Head Paul Horsnell late Tuesday, analysts at Normal Chartered, together with Horsnell, stated, “the $5 per barrel undershoot of oil costs within the wake of the varied June 2 OPEC+ producer conferences has been corrected”.
“We now have beforehand argued that the preliminary fall in costs owed a lot to speculative actions and algorithmic-driven buying and selling,” the analysts added within the report.
“We expect the fast transfer of speculative funds to the brief aspect was partly fed by preliminary evaluation that targeted solely on future will increase in provide with out putting them within the context of general market balances,” they famous.
“We discover that the market can take in the additional barrels deliberate by OPEC+ producers. Additional, our market balances indicate vital provide deficits till H2-2025, with a very massive 1.9 million barrels per day deficit in Q3-2024,” they went on to state.
Within the report, the analysts stated an unusually massive speculative brief on Brent has been a key oil market characteristic in current weeks.
“The newest CFTC and ICE positioning knowledge reveal that the bearishness in funds intensified after the June 2 OPEC+ conferences,” the analysts acknowledged.
“Our money-manager positioning index for ICE Brent fell 48.1 week on week to the utmost bearishness studying of -100.0 for the primary time since March 2020 firstly of the pandemic,” they added.
“Cash-manager internet longs in ICE Brent are simply 1.51 % of open curiosity, a record-low in knowledge going again to 2010. Internet promoting of the contract was additionally a record-high; at 103.9 million barrels it was 22.8 million barrels bigger than any single week throughout the pandemic,” they continued.
The analysts went on to state that internet promoting over the previous 5 weeks quantities to 273.3 million barrels, “one other record-high and 52.5 million barrels greater than probably the most intensive five-week interval of promoting throughout the pandemic”.
In its newest report, Normal Chartered forecasts that the close by future ICE Brent crude oil worth will common $98 per barrel within the third quarter of 2024 and $106 per barrel within the fourth quarter. Normal Chartered expects the 2025 close by future ICE Brent crude oil worth to common $109 per barrel, in response to the report.
To contact the creator, e-mail andreas.exarheas@rigzone.com
