The US Energy Information Administration (EIA) significantly revised up its this year’s forecast for global Brent crude oil prices late Tuesday, citing production cuts by OPEC and its partner countries, OPEC+.
In the April Short-Term Energy Outlook (STEO), the EIA revised up the price of Brent crude for 2023 to $85.01 per barrel and the American benchmark, West Texas Intermediate (WTI), to $79.24 a barrel. In the report last month, these figures were $82.95 and $77.10, respectively.
For next year, the agency expects the price of Brent crude to average $81.21 per barrel and WTI to average $75.21 per barrel.
The EIA said that the higher price forecast reflects a forecast for less global production in 2023 and a relatively unchanged outlook for global oil consumption.
However, the agency stated that recent banking sector issues raise the possibility of lower-than-expected economic and oil demand growth, which could result in lower oil prices.
The agency released an additional supplement examining alternative scenarios for summer gasoline prices in the US, including how the cost of gasoline factors into how much households spend on this fuel.
‘Across the oil price cases we examined, our models still showed average US household gasoline expenditures remaining lower than last year,’ said EIA Administrator Joe DeCarolis.
-US crude oil production increases
Crude oil output in the US is predicted to reach an average of 12.54 million barrels per day (bpd) this year, up from 11.86 million bpd last year.
Next year, crude oil output in the country is expected to reach 12.75 million bpd.
OPEC’s output for petroleum and other liquid fuels is estimated to average 33.69 million bpd this year and 34.65 million bpd in 2024. The group’s crude oil production will stand at 28.26 million bpd this year and 29.19 million bpd next year.
According to the report, global crude oil production will average 101.30 million bpd in 2023 and 103.25 million bpd in 2024.
Global oil demand, meanwhile, is predicted to reach 100.87 million bpd at the end of the year and 102.72 million bpd next year.
Despite the OPEC+ decision to cut crude oil production through the end of 2023, the EIA expects this year’s global production of liquid fuels—which includes gasoline, diesel, and jet fuel—to exceed 101 million barrels per day for the first time.
‘The OPEC+ production cut is certainly significant, but we expect growing global production—especially in North and South America—to offset those cuts,’ DeCarolis said.
‘We expect that world oil production and demand for petroleum products will be relatively balanced this year.’ ‘The biggest risk to our April forecast is slower-than-expected economic growth, which would limit growth in demand for fuels such as gasoline and jet fuel,’ he added.
