EIA Raises Forecasts for Benchmark Crude Prices

By Anthony Harrup

The U.S. Energy Information Administration raised its estimates for benchmark crude-oil prices for 2024, citing expectations of increased global stock drawdowns in the second half of the year.

In its Short-Term Energy Outlook, the EIA said Tuesday it expects the spot price for international benchmark Brent to average $86.37 a barrel this year, up from $84.15 in its previous forecast. The agency sees West Texas Intermediate crude averaging $82.03 a barrel, up from $79.70 previously.

"Higher prices in the second half of the year result from our forecast of persistent withdrawals from global oil inventories," the EIA said. Greater withdrawals in the second half of the year are expected to result in part from the extension of production cuts by the Organization of Petroleum Exporting Countries and its allies at least through September.

The EIA said oil inventories in the Organization of Economic Cooperation and Development countries are near the lower bound of the five-year range.

"We expect that OPEC+ will produce less crude oil than the group's announced targets through the rest of the forecast period, which will reduce global oil inventories through mid-2025 and keep OECD inventories near the bottom of the range," the EIA said.

Geopolitical tensions in the Middle East and the escalation of Houthi rebel attacks in the Red Sea, while yet to directly reduce oil supply, add to shipping costs and a near-term premium for oil prices, the EIA said.

The agency continues to see global oil consumption increasing by 1.1 million barrels a day this year, while production of crude oil and other liquid fuels is seen rising by 600,000 barrels a day with a 1.3 million barrels-a-day decrease in OPEC+ output offset by a 1.9 million barrels a day increase by non-OPEC producers led by the U.S., Canada, Guyana and Brazil.

For 2025, the EIA sees demand increasing by 1.8 million barrels a day, met by production increases of 2.2 million barrels a day. It increased its estimate for U.S. crude production next year to 13.8 million barrels a day from 13.7 million barrels a day previously. U.S. production this year is seen at 13.2 million barrels a day.

The EIA raised its price forecasts for Brent and WTI in 2025 by $3 a barrel each to $88.38 and $83.88 a barrel, respectively.

Write to Anthony Harrup at [e-mail]

(END) Dow Jones Newswires

07-09-24 1359ET