The U.S. Power Info Administration (EIA) lowered its Brent oil worth forecast for 2024 and 2025 in its newest brief time period vitality outlook (STEO), which was launched not too long ago.
In its Could STEO, the EIA projected that the Brent spot worth will common $87.79 per barrel in 2024 and $85.38 per barrel in 2025. The EIA forecast within the STEO that the commodity will common $89.30 per barrel within the second quarter, $90 per barrel within the third quarter, $88.67 per barrel within the fourth quarter, $88 per barrel within the first quarter of 2025, $86 per barrel within the second quarter, $85 per barrel within the third quarter, and $82.66 per barrel within the fourth quarter of subsequent yr.
In its earlier STEO, which was launched in April, the EIA projected that the Brent spot worth would common $88.55 per barrel this yr and $86.98 per barrel subsequent yr. In that STEO, the EIA forecast that the commodity would are available at $89.97 per barrel within the second quarter, $91.34 per barrel within the third quarter, $89.67 per barrel within the fourth quarter, $88.34 per barrel within the first quarter of subsequent yr, $87 per barrel throughout the second and third quarters, and $85.66 per barrel within the fourth quarter.
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In its newest STEO, the EIA highlighted that the spot worth of Brent crude oil averaged $90 per barrel in April, which it famous was up $5 per barrel from March and the fourth consecutive month-to-month improve.
“Nevertheless, every day crude oil spot costs have since fallen, and the Brent spot worth settled at $84 per barrel on Could 2,” the EIA mentioned within the STEO, including that costs elevated in April on account of falling international oil inventories.
“Geopolitical tensions additionally supported crude oil costs amid battle between Iran and Israel, which added uncertainty to already heightened tensions within the Center East,” the EIA said within the Could STEO.
“Regardless of these tensions, crude oil worth volatility has been subdued for a lot of this yr by important spare crude oil manufacturing capability,” it added.
“If holders of spare manufacturing capability select to deploy it, provide may be obtainable to the oil market within the occasion of any short-term provide disruption,” it continued.
Within the STEO, the EIA estimated that OPEC spare manufacturing capability can be round 4 million barrels per day by 2025. It additionally assessed that voluntary OPEC+ manufacturing cuts are decreasing international oil inventories within the first half of 2024 and estimated that international oil inventories are lowering by a median of 0.3 million barrels per day within the first half of the yr.
“We anticipate some OPEC+ producers will proceed to restrict manufacturing after present voluntary OPEC+ cuts expire on the finish of June,” the EIA mentioned within the STEO.
“Our expectation of ongoing manufacturing restraint results in our forecast of a comparatively balanced oil market in 2H24, which we anticipate will preserve oil costs close to $90 per barrel for the rest of 2024, earlier than stronger provide development contributes to international oil stock builds of 0.4 million barrels per day in 2025, inflicting costs to fall to a median of $85 per barrel subsequent yr,” it added.
“Nevertheless, there stays important uncertainty centered round ongoing developments within the Center East, which have the potential to extend oil worth volatility and result in sharp will increase in oil costs,” the EIA warned.
In a report despatched to Rigzone final week, analysts at Commonplace Chartered famous that Brent costs fell sharply on Could 1, “with the loss maintained within the following days”.
“The front-month contract reached an eight-week low of $82.41 per barrel intra-day in early buying and selling on Could 7. Brent for July supply fell by $3.87 per barrel week on week to a settlement of $83.33 per barrel on Could 6,” they added.
“The headline front-month worth was decrease week on week by $5.07 per barrel given the backwardated expiry of the June contract,” they continued.
In that report, the analysts warned that, within the very brief time period, their machine-learning oil worth mannequin “signifies that the downdraft in costs has the potential proceed slightly additional”.
“It signifies per week on week fall of $1.15 per barrel with a detrimental volatility to cost relationship taking part in a very marked position for the week on week change for settlement on Could 13,” they added.
Commonplace Chartered projected within the report that the close by future ICE Brent worth will common $98 per barrel within the third quarter of this yr, $106 per barrel within the fourth quarter, $107 per barrel within the first quarter of 2025, $103 per barrel within the second quarter, and $111 per barrel within the third quarter.
The corporate forecast within the report that the close by future ICE Brent worth will are available at $109 per barrel total in 2025, $128 per barrel total in 2026, and $115 per barrel total in 2027.
In one other report despatched to Rigzone final week, Macquarie strategists mentioned they anticipate the Brent worth to stay vary certain between $80 – $90 by the second quarter.
“At this level, we imagine the chances are higher that oil falls under $80 versus persistently rising above $90 given the gradual however regular march in direction of a cease-fire and more and more bearish fundamentals,” they added.
“Following 2Q24, we anticipate oil will develop into bearish on account of NOPEC provide development, OPEC+ spare capability returning to market, and demand disappointment because of cussed inflation,” they continued.
In a report despatched to Rigzone initially of the month, analysts at J.P. Morgan revealed that their Brent honest worth for Could remained unchanged at $88 per barrel.
“April averaged $89 vs our honest worth of $86”, the analysts highlighted in that report.
To contact the creator, e mail andreas.exarheas@rigzone.com
