EIA reveals oil price forecasts, expects upward price pressures
BAKU, Azerbaijan, May 13
By Leman Zeynalova – Trend:
The US Energy Information Administration (EIA) expects Brent crude oil prices will rise to an average of $32/b during the second half of 2020 and $48/b on average in 2021, reaching $54/b by the end of the year, Trend reports with reference to EIA’s May Short-Term Energy Outlook (STEO).
However, this price path reflects an expected of global oil consumption to 97.4 million b/d during the second half of 2020, along with relatively high compliance to announced OPEC+ production cuts, both of which are uncertain, reads the report.
Also, the degree to which the US shale industry responds to the current low prices will affect the oil price path in the coming quarters.
Brent crude oil spot prices averaged $18 per barrel (b) in April, down $13/b from March as global oil demand continued to fall and global oil inventories rose strongly.
In particular, crude oil prices fell as concerns regarding the capacity of global oil storage to handle expected inventory builds increased. EIA expects that the rate of inventory builds peaked in April, and as oil demand begins to return and oil supply decreases, upward price pressures will begin to emerge.
With global oil demand expected to exceed supply beginning in the second half of 2020 and continuing through the forecast period, prices could rise steadily beginning in the second half of this year.
Although EIA forecasts significant inventory draws beginning in July, high existing inventory levels, high OPEC spare production capacity, and uncertainty about the trajectory of oil demand will likely limit, but not completely contain, upward crude oil price movements.
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