US increases forecast for oil prices
Baku, Azerbaijan, Jan. 11
By Elena Kosolapova - Trend:
Average price for Brent oil will be $53.5 per barrel in 2017 and $56.18 per barrel in 2018, according to the US Energy Information Administration’s (EIA) forecasts in its January 2017 Short-term Energy Outlook.
In its December 2016 Short-term Energy Outlook, the EIA forecast the Brent crude oil price at $51.66 in 2017. The EIA did not give forecast for 2018 oil prices in its previous Short-term Energy Outlooks.
West Texas Intermediate (WTI) oil prices are forecast at $52.5 per barrel in 2017 and $55.18 per barrel in 2018, according to the EIA.
In its December 2016 Short-term Energy Outlook, the EIA forecast the WTI prices at $50.66 in 2017.
The prices for Brent and WTI stood at $52.32 per barrel and $48.67 per barrel, respectively, in 2015, said the EIA. In 2016 Brent and WTI prices hit $43.74 per barrel and 43.33 per barrel respectively.
The EIA noted that the monthly average spot price of Brent crude oil increased by $9 per barrel in December to $53 per barrel. Market reactions to the November 30 OPEC agreement to cut production by 1.2 million barrel per day starting in January 2017 were a major contributor to rising oil prices in December, the report said.
Despite the recent OPEC agreement, EIA expects global oil inventory builds to continue but at a generally slower rate in 2017 and 2018 than the 2016 average build. The expected persistence of excess global oil supply in the near term, along with the responsiveness of U.S. tight oil production to rising oil prices in late 2016, is expected to limit significant upward oil price pressures in 2017.
According to the January Short- term Energy Outlook, global oil markets are expected to be more balanced by mid-2018, with global oil inventories transitioning from moderate builds of 0.4 million barrels per day in the first half of the year to an average draw of 0.1 million barrels per day in the second half, resulting in a build of about 0.1 million barrels per day build for all of 2018.
According to EIA, global economic developments and geopolitical events in the coming months have the potential to push oil prices higher or lower than the current price forecast. Uncertainty remains as to the effectiveness and duration of the concurrent OPEC and non-OPEC production cuts, which could influence prices in either direction. Also, the potential for continued efficiency gains and cost reductions from non-OPEC producers in the new higher price environment could result in additional volumes of supply that could put downward pressure on prices.
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