The US Energy Information Administration (EIA) revised down its 2022 forecast for global Brent crude oil prices on Thursday, citing oil supply disruptions, slower-than-expected crude production growth and slower-than-forecast economic growth.
In the September Short-Term Energy Outlook (STEO), the EIA revised up the price of Brent crude for 2022 to an average of $104.21 per barrel and American benchmark West Texas Intermediate (WTI) to $98.07 a barrel in 2022. In the report last month, these figures were $104.78 and $98.71, respectively.
The EIA cautioned that the price forecast is ‘highly uncertain,’ driven by a range of factors, including the Russia-Ukraine war, the extent to which EU sanctions will affect Russia’s oil production, and the production decisions of OPEC+ along with the growth rate of US oil and natural gas production.
The agency estimates that crude oil prices will generally remain near August average levels through the end of 2023, ranging between $90 barrels per day (bpd) to $100 bpd.
However, it pointed to the possibility of significant volatility around these averages, caused by potential output cuts after OPEC’s decision to reduce crude oil production by 100,000 bpd in October and the threat of increasing conflict following the outbreak of violent clashes in the Libyan capital of Tripoli.
The potential return to an Iran nuclear deal that could lift sanctions on the country to allow its crude oil exports into the market is a factor raising supply side uncertainty. In addition, the risk of hurricanes, resulting in potential production outages, and limited export traffic along the US Gulf Coast are other factors leading to market unpredictability.
-US crude oil production increases
Crude oil output in the US is predicted to average 11.8 million barrels per day (bpd) in 2022, up from 11.25 million bpd in 2021.
In 2023, crude oil output in the country is expected to set a record at 12.6 million bpd. The previous record set in 2019 was 12.3 million bpd.
The agency forecast that OPEC crude oil production averaged 33.76 million bpd in the first half of 2022 and will reach 34.41 million bpd in the last quarter of the year. OPEC’s output is estimated to average 34.11 million bpd in 2022 and 34.49 million bpd in 2023.
It predicts that non-OPEC liquids production will be 65 million bpd in 2022 and will grow by 810,000 bpd to reach 66.79 million bpd next year.
Thus, global crude oil production will average 100.9 million bpd in 2022 and increase by 1.19 million bpd to reach 101.28 million bpd in 2023.
The agency forecast that global oil demand grew by 1.6 million bpd in August compared to the same month of last year and will reach 99.53 million bpd at the end of the year and 101.5 million bpd next year.
