BAKU, Azerbaijan, Apr.7
By Leman Zeynalova - Trend:
Brent crude oil spot prices averaged $65 per barrel (b) in March, up $3/b from February and up $33/b from March 2020, the onset of the COVID-19 pandemic in the United States, Trend reports with reference to the US Energy Information Administration (EIA).
Rising Brent prices in March continued to reflect expectations of rising oil demand as both COVID-19 vaccination rates and global economic activity have increased, combined with ongoing crude oil production limits from members of OPEC and partner countries (OPEC+). EIA forecasts that Brent prices will average $65/b in the second quarter of 2021, $61/b during the second half of 2021, and $60/b in 2022.
Monthly average Brent crude oil prices in March were the highest since late 2019. Crude oil prices in early March reached $70/b following OPEC+’s March 4 announcement that it was extending production limits through April. However, prices subsequently declined, which partly reflected slowing global oil demand growth as COVID-19 cases increased, notably in Europe.
On April 1, OPEC+ announced it would ease existing limits on production beginning in May. This announcement was generally consistent with EIA’s assumption in last month’s STEO. However, Saudi Arabia also announced they would gradually relax its voluntary 1.0 million barrel per day (b/d) cut over the May–July period.
“If implemented as announced, Saudi Arabia’s increase would occur more slowly than we had previously assumed. We revised our forecast for second quarter 2021 OPEC crude oil production down by 0.5 million b/d from the March STEO.
With lower production from OPEC than in the March STEO, EIA expects markets will be somewhat tighter in the second quarter than previously forecast, contributing to some upward price pressures.
“We forecast that the Brent crude oil price will average $65/b in the second quarter, when quarterly stock draws average 1.5 million b/d. Although that rate represents a significant draw in stocks, it is down slightly from the first quarter of 2021, when we estimated stock draws averaged 2.1 million b/d,” reads the report.
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