USA EIA Boosts Brent Oil Price Forecasts
by Andreas Exarheas
click here to read the original article at Rigzone.com
*this article was not written by Roseland Oil & Gas
The U.S. Energy Information Administration (EIA) has increased its Brent spot average price forecasts for both 2023 and 2024, according to the organization’s latest short term energy outlook (STEO), which was released this week.
In the August STEO, the Brent spot price is projected to average $82.62 per barrel this year and $86.48 per barrel next year. The EIA’s previous STEO, which was released in July, saw the Brent spot price average coming in at $79.34 per barrel in 2023 and $83.51 per barrel in 2024.
Broken down quarterly, the EIA’s latest STEO anticipates that the Brent spot price will average $83.77 per barrel in the third quarter, $87.65 per barrel in the fourth quarter, $88 per barrel in the first quarter of 2024, $87 per barrel in the second quarter of next year, $86 per barrel in the third quarter, and $85 per barrel in the fourth quarter.
The EIA’s July STEO saw the Brent spot price averaging $78.32 per barrel in the third quarter, $79.97 per barrel in the fourth quarter, $81.98 per barrel in the first quarter of next year, $83 per barrel in the second quarter, $84 per barrel in the third quarter, and $85 per barrel in the fourth quarter.
“The Brent crude oil spot price averages $85 per barrel in August in our forecast,” the EIA noted in its August STEO.
“Crude oil prices have increased since June, primarily because of extended voluntary cuts to Saudi Arabia’s crude oil production and increasing global demand,” the EIA added.
“We expect these factors will continue to reduce global oil inventories and put upward pressure on oil prices in the coming months, with the Brent price averaging $86 per barrel in the second half of 2023, up about $7 per barrel from our July STEO forecast for the same period,” the EIA continued.
“Rising global oil production in 2024 in our forecast keeps pace with oil demand and puts moderate downward pressure on crude oil prices beginning in the second quarter of 2024,” the organization went on to state.
In its latest STEO, the EIA estimates that global oil inventories will transition from a period of inventory builds in the first half of 2023 to inventory draws through the end of the year. Global oil inventories increased by an average of 0.6 million barrels per day in the first half of the year, the EIA highlighted in the STEO, adding that it forecasts that they will decrease by an average of 0.4 million barrels per day in the second half of the year. The EIA noted in the STEO that it expects slight inventory builds in 2024.
Short Term Bullish
In a new report sent to Rigzone on Tuesday, Macquarie strategists said they remain short term bullish on crude as they expect balances to tighten due to increasing refining runs and OPEC cuts.
“Last week, Saudi announced the extension of its one million barrel per day unilateral cut into September,” the strategists noted in the report.
“Russia extended their export reduction as well but lowered it to 300,000 barrels per day for September,” they added.
The strategists noted in the report, however, that, even with these extensions, draws could disappoint without an acceleration of OPEC cuts.
“Following the current rally, we foresee a price correction in 4Q23/1Q24 due to sweet production growth in the U.S. and N. Sea and waning OPEC+ compliance,” the strategists stated in the report.
In the Macquarie report, the strategists outlined that U.S. macro concerns had improved but warned that global risks persist.
“In the U.S., 2Q GDP beat expectations came in a 2.4 percent vs the surveyed median of 1.8 percent. Following the GDP print, the June PCE core deflator year on year came in at 4.1 percent against an expectation of 4.2 percent, adding to the improved outlook,” the Macquarie strategists said in the report.
“For the week ending in August 1, speculator length grew by 48.5K contracts for Brent and WTI combined. The improving macro environment in the U.S. has potentially supported the current rally, however, the manufacturing stats in the U.S., Europe and China continue to raise concerns,” they added.
“In July, manufacturing PMI remained in contraction with the three economies reporting 49.0, 42.7 and 49.2 respectively. With the U.S. showing signs of improvement, the market shifts its focus to China and the ability for the recent policy changes to stimulate growth, something we believe is likely,” the analysts continued.
Determination to Normalize Market Conditions
In another report sent to Rigzone this week, analysts at Standard Chartered outlined that Saudi Arabia had reinforced “its determination to normalize oil market conditions”.
“On August 3 the Saudi Press Agency (SPA) published confirmation that Saudi Arabia will extend its one million barrels per day voluntary oil output cut into September, quoting Ministry of Energy sources. However, the announcement contained an important nuance which was largely missed by much of the media coverage,” the Standard Chartered analysts said in the report.
“The wording of the SPA releases noted that the voluntary cut ‘can be extended or extended and deepened’. The new element is ‘deepened’; this is the first time Saudi Arabia has signaled that it is fully prepared to cut output further if the process of inventory and price stabilization drags on,” they added.
The analysts highlighted in the report that their projections suggest that Saudi Arabia will not cut further. The report also revealed that Standard Chartered is projecting that ICE Brent will average $91 per barrel in 2023 and $98 per barrel in 2024.
Standard Chartered expects the commodity to average $88 per barrel in the third quarter, $93 per barrel in the fourth quarter, $92 per barrel in the first quarter of next year, $94 per barrel in the second quarter of 2024, $98 per barrel in the third quarter, and $106 per barrel in the fourth quarter, the report showed.
At the time of writing, Brent is trading at $87.72 per barrel. The commodity has been on an upward trajectory since closing at $72.26 per barrel on June 27.
by Andreas Exarheas
click here to read the original article at Rigzone.com
*this article was not written by Roseland Oil & Gas