The U.S. Vitality Info Administration (EIA) elevated its common Brent spot value forecast for each 2023 and 2024 in its newest quick time period vitality outlook (STEO), which was launched on April 11.
Based on the April STEO, the EIA now sees the Brent spot value averaging $85.01 per barrel this yr and $81.21 per barrel subsequent yr. The EIA’s earlier STEO, which was launched on March 7, projected that the Brent spot value would common $82.95 per barrel in 2023 and $77.57 per barrel in 2024.
“The Brent crude oil spot value in our forecast averages $85 per barrel in 2023, up $2 per barrel from final month’s forecast,” the EIA acknowledged within the newest STEO.
“The upper value forecast displays a forecast for much less international manufacturing in 2023 and a comparatively unchanged outlook for international oil consumption,” the EIA added.
“Regardless of our larger value forecast, latest points within the banking sector elevate the potential that financial and oil demand progress shall be decrease than our forecast, which has the potential to end in decrease oil costs,” the EIA warned within the STEO.
In its April STEO, the EIA famous that it expects international oil markets shall be in relative stability over the approaching yr.
“International oil inventories, which elevated by 0.4 million barrels per day in 2022 and by 1.1 million barrels per day in 1Q23 shall be principally unchanged through the second half of 2023,” the EIA mentioned within the STEO.
“We count on builds will common about 0.5 million barrels per day starting in 2024. This forecast assumes the latest OPEC cuts expire firstly of 2024. Given our forecast of comparatively balanced oil markets in 2H23, we count on costs will common $86 per barrel for the remainder of 2023,” the EIA continued.
Within the STEO, the EIA outlined that downward value pressures emerge within the second quarter of 2024, “after we count on international oil inventories will start to construct extra considerably”.
“Nonetheless, as a result of these builds rely on OPEC rising its crude oil manufacturing, uncertainty within the forecast for this era comes from much less oil manufacturing than we forecast, which may end in larger costs than in our forecast,” the EIA acknowledged.
In an extraordinary market replace despatched to Rigzone earlier this month, Rystad Vitality Senior Vice President Jorge Leon famous that, if totally delivered, the newly introduced OPEC+ cuts would additional tighten an already basically tight oil market, drive Brent in direction of $100 per barrel earlier than beforehand anticipated and push the value to round $110 per barrel this summer season.
Requested if Brent will get to $100 per barrel this yr, James Davis, the Director of Brief-Time period International Oil Service & Head of Upstream Oil at FGE, informed Rigzone, “it’s now fairly probably that Brent will transfer to over $100 per barrel this yr, given the 1.15 million barrels per day of additional voluntary cuts deliberate for Might by numerous OPEC+ members”.
When requested the identical query, Ed Morse, the Managing Director and International Head of Commodity Analysis at Citi Group, informed Rigzone, “we expect it’s extremely unlikely that Brent costs will rise above $100 this yr and that if it does it gained’t probably keep there for lengthy”.
“Sure provide/demand balances are tight? Given the choice of numerous international locations to chop manufacturing beginning in Might, market balances are prone to tighten, with inventories altering year-on-year by little greater than a median 100 thousand barrels a day,” he added.
“We see extra draw back than upside danger to our forecast of Brent oil averaging $84 per barrel in 2023,” Morse continued.
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