The US Energy Information Administration (EIA) lowered its Brent crude oil price forecasts for 2022 and 2023, in its latest short term energy outlook (STEO).
According to its July STEO, the EIA now sees the average Brent spot price coming in at $104.05 per barrel for 2022 and $93.75 per barrel in 2023. The EIA’s previous STEO, which was released in June, forecasted that the average Brent spot price would be $107.37 per barrel in 2022 and $97.24 per barrel in 2023.
In the July STEO, the EIA predicts that the average Brent spot price will be $104.27 per barrel in the third quarter of this year and $96.97 per barrel in the fourth quarter. In its previous STEO, the EIA saw the 3Q and 4Q averages coming in at $111.28 per barrel and $104.97 per barrel, respectively.
Looking at 2023 quarterly figures, the EIA’s latest STEO sees 1Q, 2Q, 3Q, and 4Q Brent spot prices averaging $95 per barrel, $94 per barrel, $93 per barrel, and $93 per barrel, respectively. The EIA’s June STEO saw 1Q, 2Q, 3Q, and 4Q Brent spot prices coming in at $99.30 per barrel, $96.65 per barrel, $96 per barrel, and $97 per barrel, respectively.
The EIA stated in its latest STEO: “We expect the Brent crude oil price will average $101 per barrel in 2H22 and then fall to $94 per barrel in 2023.
“The forecast price declines are the result of expected increases in global oil inventories in late 2022. Most of the price declines in our forecast occur in 2H22, with prices falling from $123 per barrel on average in June to $97 per barrel in 4Q22.
“Although inventories build in our forecast, they are currently lower than in 2019, which may limit some of the downward price pressures associated with rising inventories and raises the potential for continuing volatility. In addition, we expect more balanced markets in 2023. As a result of this balance, crude oil prices in our forecast decline slowly through 2023, falling from $97 per barrel in 4Q22 to $93 per barrel in 4Q23.”
The EIA noted that its July STEO is subject to heightened uncertainty resulting from a variety of factors, including Russia’s full-scale invasion of Ukraine.
The EIA said: .“The possibility of economic activity being less robust than assumed in our forecast could result in lower-than-forecast energy consumption.
“Factors driving uncertainty about energy supply include how sanctions affect Russia’s oil production, the production decisions of OPEC+, and the rate at which US oil and natural gas production rises.”
On July 27, the price of Brent crude oil stood at $106.99 per barrel. Brent has closed above $120 on several occasions in 2022, but closed under $100 per barrel on July 12 for the first time since April.
For more information visit www.eia.gov
