BAKU, Azerbaijan, Nov.11
By Leman Zeynalova – Trend:
The US Energy Information Administration (EIA) expects that as global oil demand rises, forecast inventory draws in 2021 will cause some upward oil price pressures, Trend reports with reference to EIA.
EIA forecasts Brent crude oil prices will average $47/b in 2021.
“Brent crude oil spot prices averaged $40 per barrel (b) in October, down $1/b from the average in September. Brent prices fell in October as previously disrupted crude oil production in Libya came back online and as COVID-19 cases began increasing in many countries, which could reduce oil demand in the coming months. Despite these developments, the U.S. Energy Information Administration expects global oil inventories to continue falling in the coming months,” reads the updated EIA report.
However, EIA expects high global oil inventory levels and surplus crude oil production capacity will limit upward pressure on oil prices and that Brent prices will remain near $40/b through the end of 2020.
“Crude oil price pressures were mostly downward in October, pushing Brent to less than $38/b late in the month. However, prices increased during the first week of November to about $40/b. The general downward price pressures came amid renewed crude oil price volatility that was primarily the result of a supply increase from Libya that came sooner than many market participants expected as well as responses to increasing COVID-19 cases. Rapid increases in crude oil production in Libya likely magnified the downside price effects of reduced demand.”
EIA estimates that Libya’s crude oil production increased to 0.4 million barrels per day (b/d) in October 2020 from 0.1 million b/d in September. In addition, trade press reports indicate that production had increased to more than 0.5 million b/d by the end of October, a level EIA had previously forecast would not be reached until the middle of 2021. The increase in crude oil production adds supply to the current market where petroleum inventories remain high, crude oil refinery runs are subdued, and the rate of increase in global oil demand growth is slowing.
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