USA EIA Lowers 2024 and 2025 Brent Oil Price Forecast
by Andreas Exarheas
Click Here to read this article at Rigzone.com
*This article was not written by Roseland Oil & Gas
The U.S. Energy Information Administration (EIA) lowered its 2024 and 2025 Brent spot price forecast in its latest short term energy outlook (STEO), which was released this week.
According to its December STEO, the EIA now sees the Brent spot price averaging $80.49 per barrel in 2024 and $73.58 per barrel in 2025. The EIA’s previous STEO, which was released in November, projected that the Brent spot price would average $80.95 per barrel this year and $76.06 per barrel next year.
A quarterly breakdown included in the EIA’s December STEO showed that the organization expects the Brent spot price to average $74.37 per barrel in the fourth quarter of this year, $74.00 per barrel in the first quarter of next year, $74.33 per barrel in the second quarter, $74.00 per barrel in the third quarter, and $72.00 per barrel in the fourth quarter of 2025.
In its previous STEO, the EIA forecast that the Brent spot price would come in at $76.20 per barrel in the fourth quarter of this year, $78.00 per barrel in the first quarter of 2025, $77.67 per barrel in the second quarter, $75.67 per barrel in the third quarter, and $73.02 per barrel in the fourth quarter.
Both STEOs put the 2023 Brent spot price at $82.41 per barrel.
“The Brent crude oil spot price averaged $74 per barrel in November, $1 less than the average in October,” the EIA noted in its December STEO.
“Crude oil prices fell slightly in November following a ceasefire between Israel and Hezbollah in Lebanon. The ceasefire removed some of the risk premium present in oil prices, which had reflected the potential for attacks on oil infrastructure and a disruption to oil supplies,” it added.
“In addition, signs of weakening global oil demand growth, primarily centered on slowing oil demand growth in China, continued to weigh on prices,” it continued.
In its latest STEO, the EIA also highlighted that, last week, some OPEC+ countries “agreed to delay production increases that were set to begin in January 2025 until April 2025” and OPEC+ “announced production targets through 2026”.
“Our forecast assumes OPEC+ will generally raise production in line with the new target levels through much of 2025, as the announced targets align with the production that we expect will keep oil markets relatively balanced next year,” the EIA said in its December STEO.
“We expect global oil inventories will end 2025 near their current volume. We estimate that ongoing OPEC+ production cuts have contributed to global oil inventory withdrawals of about 0.4 million barrels per day on average in 2024, and we expect that the extension of OPEC+ production cuts will cause inventories to fall by 0.7 million barrels per day the first quarter of 2025,” it added.
“However, we expect the subsequent ramp up in OPEC+ production and continued supply growth outside of OPEC+ will lead to an average inventory build of 0.1 million barrels per day over the remainder of 2025,” it went on to state.
The EIA said in its latest STEO that it forecasts that inventory builds will put some downward pressure on crude oil prices later in 2025, “with Brent falling from an average of $74 per barrel in 1Q25 to an average of $72 per barrel in 4Q25”.
The organization also warned in its December STEO that it continues to see “at least two main sources of price uncertainty”. These are “the course of the ongoing Middle East conflict and OPEC+ members’ willingness to adhere to voluntary production cuts”, the EIA highlighted in the STEO.
“The volatility and risk premium associated with the conflict in the Middle East moderated in recent weeks before prices increased again on December 9 following Syrian President Bashar al-Assad’s ouster,” the EIA said in its latest STEO.
“An escalation in the regional conflict has potential to reduce oil supplies, and regional political uncertainty can increase the risk premium,” it added.
“Second, although we assess that OPEC+ producers will likely continue to limit production below recently announced targets in 2025, the potential for weakening commitment among OPEC+ producers to continue cutting production adds downside risk to oil prices,” it continued.
A research note sent to Rigzone by the JPM Commodities Research team on December 6 showed that J.P. Morgan expects the Brent Crude price to average $80 per barrel in 2024 and $73 per barrel in 2025.
That note showed that the company sees the commodity averaging $74 per barrel across the fourth quarter of 2024 and the first quarter of 2025, $77 per barrel in the second quarter of next year, $73 per barrel in the third quarter, and $69 per barrel in the fourth quarter.
“Our view on oil shifts from neutral to outright bearish,” J.P. Morgan analysts stated in the note.
“Brent crude oil price is projected to average $80 per barrel in 2024 – $2 below our expectations from last June – before slipping to $73 in 2025 and $61 in 2026,” they added.
A report sent to Rigzone by Standard Chartered Bank Commodities Research Head Paul Horsnell this week showed that the bank expects the ICE Brent nearby future crude oil price to average $89 per barrel in the first quarter of next year, $92 per barrel in the second quarter, $95 per barrel in the third quarter, $93 per barrel in the fourth quarter, and $92 per barrel overall in 2025.
“We forecast a 2025 global demand increase of 1.31 million barrels per day, with non-OPEC supply growth of 0.96 million barrels per day,” Standard Chartered analysts, including Horsnell, said in the report.
“Our model puts the Q1 balance as a draw of 0.2 million barrels per day … Our overall projected balance for 2025 is a draw of 0.1 million barrels per day, even if there are no reductions in export flows from Iran during the year,” they added.
by Andreas Exarheas
Click Here to read this article at Rigzone.com
*This article was not written by Roseland Oil & Gas