Baku, Azerbaijan, Jan. 16
By Leman Zeynalova – Trend:
Brent spot prices will gradually increase from an average of $57 per barrel (b) in December 2018 to $65/b by December 2020, the US Energy Information Administration (EIA) said in its January Short-term Energy Outlook (STEO), Trend reports.
Brent crude oil spot prices averaged $71/b in 2018, an increase of $17/b from 2017 levels, according to the EIA estimates.
Daily Brent spot prices last year reached a peak of $86/b in October 2018, which was the highest level since October 2014, before falling to nearly $50/b by the end of the year, reads the report.
“The price decrease in the latter part of 2018 reflected global oil inventory builds and record levels of oil production from the world’s three largest producers—the United States, Russia, and Saudi Arabia—along with uncertainties about global demand growth for the coming year.”
EIA forecasts that Brent spot prices will gradually increase from an average of $57/b in December 2018 to $65/b by December 2020. Forecast Brent spot prices average $61/b in 2019 and $65/b in 2020.
“Although OPEC+ producers announced in early December plans to cut production starting in January 2019, Brent crude oil prices continued to fall after the announcement. The price declines possibly reflected market expectations that announced production decreases would not be enough to offset increasing production levels in North America, along with the potential for weakening global oil demand growth, which could lead to continued growth in global oil inventory levels,” said EIA.
Given the expectation of relatively balanced markets in 2019 and 2020, with modest inventory builds, EIA forecasts Brent crude oil prices will remain lower than levels experienced during most of 2018, averaging $61/b in 2019 and $65/b in 2020.
Although prices are forecast to remain lower than those experienced during most of 2018, some upward price movements from December 2018 price levels are expected to emerge in early 2019 from the need for global oil inventories to rise slightly to keep pace with demand growth and maintain five-year average levels of demand cover, according to the report.
Additional upward price moves are forecast in late 2019 and early 2020 because of an increase in refinery demand for light-sweet crude oil as a result of International Maritime Organization regulations.
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