US energy agency revises down oil price forecast for 2023

The US Energy Information Administration (EIA) revised down its 2023 forecast for global crude oil prices, citing build in global oil inventories.

In the March Short-Term Energy Outlook (STEO), the EIA revised down the price of Brent crude for 2023 to an average of $82.95 per barrel. In the report released in February, this figure was $83.63 per barrel.

The American benchmark, West Texas Intermediate (WTI), is expected to average $77.10 a barrel in 2023. In the report released in February, this figure was $77.84.

The agency pointed to build in global oil inventories for the downward price revisions, however, it said high demand for crude oil from refineries due to elevated refining margins will limit downward pressure on crude oil prices through second quarter of the year “as refiners maintain high levels of crude oil inputs to maximize distillate fuel production.”

“Russia was a key supplier of distillate fuel to Europe, and changes in distillate trade flows as Europe reduced imports of distillate from Russia in recent months have kept distillate fuel margins well-above five-year averages,” it added.

– US crude oil production increases

Crude oil output in the US is predicted to average 12.44 million barrels per day (bpd) this year, up from 11.88 million bpd in 2022.

In 2024, crude oil output in the country is expected to reach 12.63 million bpd.

OPEC’s output for petroleum and other liquid fuels this year is estimated to average 34.05 million bpd and 34.75 million bpd in 2024. The group’s crude oil production is projected to stand at 28.63 million bpd this year and 29.29 million bpd next year.

Global crude oil production will average 101.47 million bpd this year and 103.02 million bpd next year.

The agency also forecasts that global oil demand will reach 100.90 million bpd at the end of the year and 102.69 million bpd next year, reporting a slight increase from previous forecast month.

However, despite upward revisions to global liquid fuels consumption, the EIA pointed to consistent global oil inventory builds as global oil production continues to outpace consumption.

The agency also raised its forecast for oil production in Russia through the end of 2024.

Production of petroleum and other liquids in Russia will decline to 10.3 million bpd in 2023 from 10.9 million bpd in 2022 and then average 10.1 million bpd in 2024.

This is about 400,000 bpd and 300,000 bpd more respectively than its previous forecast.

“Given this revision to production, we expect that global oil inventories, which rose by 0.4 million bpd in 2022, will grow by an additional 0.6 million bpd in 2023 and 0.3 million bpd in 2024, putting downward pressure on oil prices later in 2023,” it said.

• Short-Term Energy Outlook
• US Energy Information Administration