BAKU, Azerbaijan, Apr.8
By Leman Zeynalova – Trend:
Brent crude oil prices averaged $32/barrel (b) in March, a decrease of $24/b from the average in February and the lowest monthly average since January 2016, the US Energy Information Administration (EIA) said in its April Short-term Energy Outlook (STEO), Trend reports.
EIA forecasts Brent crude oil prices will average $33/b in 2020, $10/b lower than in last month’s STEO and down from an average of $64/b in 2019.
EIA expects prices will average $23/b during the second quarter of 2020 before increasing to $30/b during the second half of the year.
EIA forecasts that average Brent prices will rise to an average of $46/b in 2021, $10/b lower than forecast last month, as a return to declining global oil inventories puts upward pressure on prices.
EIA assumes that the sharp reductions in global crude oil prices, which occurred during March 2020 as a result of COVID-19, will persist through the second quarter before prices begin gradually increasing through the end of the forecast.
EIA expects that considerable decreases in liquid fuel consumption will result from containment measures and economic disruptions related to COVID-19, which will affect U.S. refinery activity and, consequently, demand for crude oil.
However, crude oil supply will increase in the short term as a result of agreed production cuts among OPEC+ that were suspended. EIA assumes that these two factors will keep global crude oil prices at multi-year low averages through the first half of 2020. Only gradual increases in crude oil prices are expected through all of 2020 as these factors persist, which could lead to record levels of expected global oil inventory builds in the first half of 2020.
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