The U.S. Power Data Administration (EIA) revealed its newest Brent spot worth forecasts in its January quick time period vitality outlook (STEO), which was printed this week.
Based on the STEO, the EIA sees the 2025 Brent spot worth averaging $74.31 per barrel and the 2026 Brent spot worth coming in at $66.46 per barrel. The EIA’s earlier STEO projected that the 2025 Brent spot worth would common $73.58 per barrel. That STEO didn’t provide a Brent spot worth projection for 2026.
The EIA expects the Brent spot worth to common $76.34 per barrel within the first quarter of this yr, $75 per barrel within the second quarter, $74 per barrel within the third quarter, $72 per barrel within the fourth quarter, $68.97 per barrel within the first quarter of 2026, $67.33 per barrel within the second quarter, $65.68 per barrel within the third quarter, and $64 per barrel within the fourth quarter of 2026, the January STEO confirmed.
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In its December STEO, the EIA forecast that the Brent spot worth would common $74 per barrel within the first quarter of this yr, $74.33 per barrel within the second quarter, $74 per barrel within the third quarter, and $72 per barrel within the fourth quarter.
The EIA highlighted within the STEO that its forecast was accomplished earlier than america issued further sanctions focusing on Russia’s oil sector on January 10.
“For all of 2024, the Brent worth averaged $81 per barrel and in 2023 averaged $82 per barrel,” the EIA famous in its newest STEO.
“Following some preliminary upward worth strain in early 2025, we anticipate that crude oil costs will usually decline from mid-2025 by way of the tip of 2026 as development in world oil manufacturing outpaces development in oil demand,” it added.
“In our forecast, will increase in oil costs within the coming months are largely a results of the current extension of OPEC+ manufacturing cuts, which we anticipate will result in world oil stock withdrawals of 0.5 million barrels per day on common within the first quarter of 2025,” it continued.
“We anticipate that falling world oil inventories will enhance crude oil costs $2 per barrel from their December common to a median of $76 per barrel in 1Q25,” it went on to state.
The EIA famous in its STEO that it expects that OPEC+ will start to extend manufacturing by 2Q25. It added that it additionally expects that manufacturing development from exterior of OPEC+ will proceed, “although at a slower tempo than in 2023 and 2024”.
“This manufacturing development, coupled with comparatively weak development in oil demand development will trigger world oil inventories to build up from mid-2025 by way of 2026,” the EIA warned within the STEO.
“World inventories enhance by a median of 0.3 million barrels per day in 2025 and by 0.7 million barrels per day in 2026,” it added.
“Growing inventories put downward strain on costs by way of the rest of our forecast. Consequently, we anticipate the common Brent crude oil worth will fall to $72 per barrel in December 2025, earlier than falling to a median of $66 per barrel in 2026,” it continued.
The EIA warned in its January STEO that important uncertainty stays inside its worth forecast.
“Whereas we assess that OPEC+ producers will seemingly proceed to restrict manufacturing largely in step with lately introduced targets by way of 2026, the potential for weakening dedication amongst OPEC+ producers to proceed restraining manufacturing provides draw back danger to grease costs,” the EIA stated.
“Secondly, though no oil provides have been instantly affected to date, tensions stay excessive across the Center East, and future developments have the potential to affect oil costs,” it added.
“Lastly, our world oil consumption forecast exhibits development that continues to be lower than its pre-pandemic common, however modifications in financial development and different elements may considerably alter the trajectory in contrast with our forecast,” it went on to state.
Rigzone has contacted OPEC for touch upon the EIA’s January STEO. On the time of writing, OPEC has not but responded to Rigzone.
In a report despatched to Rigzone by Customary Charted Financial institution Commodities Analysis Head Paul Horsnell late Tuesday, Customary Charted Financial institution projected that the ICE Brent close by future crude oil worth will common $82 per barrel within the first quarter of 2025, $84 per barrel within the second quarter, $89 per barrel within the third quarter, $93 per barrel within the fourth quarter, $91 per barrel within the first quarter of 2026, and $93 per barrel within the second quarter of subsequent yr.
“The energy in early-year crude oil costs has taken a lot of the market abruptly,” Customary Chartered Financial institution analysts, together with Horsnell, said within the report.
“Nonetheless, we predict the vast majority of merchants have missed the primary supply of that shock and assume that it’s only winter climate and sanctions of Russia which have detracted from the earlier consensus of a 2025 provide glut,” they added.
“We expect there are different deeper causes for the energy in immediate markets: underlying non-weather-related demand is extra strong than consensus anticipated; OPEC+ has been profitable in maintaining provide trimmed and shut to focus on; and non-OPEC provide development is already beginning to disappoint relative to a number of the wilder expectations for a surge in early 2025,” they went on to state.
In an oil and fuel report despatched to Rigzone by the Macquarie crew on Wednesday, Macquarie strategists famous that “Brent has rallied over $6 per barrel to begin the yr”.
“Value motion has largely created a curve rally because the market has priced in potential provide disruption, creating steep backwardation,” the strategists stated within the report.
“With the expectation of tighter fundamentals, these provide aspect elements offered the catalyst for worth to breach the 200D MA,” they added.
Within the report, the strategists stated “each WTI and Brent speculative (MM + Different) web size grew over the previous week”.
“WTI web size elevated by 37.9K whereas Brent rose by 22.3K. WTI spec web size gained as new lengthy curiosity was over 5 higher than added shorts,” they highlighted.
To contact the creator, e mail andreas.exarheas@rigzone.com
