USA EIA Reveals Latest Brent Oil Price Forecast for 2024 and 2025
The U.S. Energy Information Administration has revealed its latest Brent oil price forecast for this year and next year.
In its latest short-term energy outlook (STEO), which was released this week, the U.S. Energy Information Administration (EIA) revealed its latest Brent oil price forecast for 2024 and 2025.
According to its October STEO, the EIA now sees the Brent spot price averaging $80.89 per barrel this year and $77.59 per barrel next year. In its previous STEO, which was released in September, the EIA projected that the Brent spot price would average $82.80 per barrel in 2024 and $84.09 per barrel in 2025.
A quarterly breakdown included in the October STEO revealed that the EIA sees the Brent spot price average coming in at $75.97 per barrel in the fourth quarter of this year, $78 per barrel in the first quarter of 2025, $79 per barrel in the second quarter, $77.67 per barrel in the third quarter, and $75.72 per barrel in the fourth quarter.
In the EIA’s September STEO, the organization forecast that the Brent spot price would average $81.64 per barrel in the fourth quarter of 2024, $83.34 per barrel in the first quarter of 2025, $85 per barrel across the second and third quarters of next year, and $83 per barrel in the fourth quarter.
The EIA’s latest STEO put the 2023 Brent spot price average at $82.41 per barrel.
“The Brent crude oil spot price averaged $74 per barrel in September, down $6 per barrel from August,” the EIA noted in its October STEO.
“Prices fell in September as concerns over global oil demand growth outweighed declines in oil inventories and OPEC+ members’ decision to delay production increases until December 2024,” it added.
“However, after recent military actions involving Israel, Lebanon, and Iran, the Brent spot price rose to $79 per barrel on October 4, up 11 percent from a week earlier,” it continued.
“The potential for further escalation – such as an Israeli response to Iran’s missile attack on October 1 – have injected significant uncertainty and volatility into oil markets in recent days,” it went on to state.
“Following the September drop in prices and our expectation that oil demand growth will be lower next year than we had previously forecast, we have lowered our forecast for crude oil prices despite increasing oil prices in early October,” it noted.
In its latest STEO, the EIA highlighted that no oil supplies have been affected by increased military action in the Middle East and noted that it does not assume any disruption in its forecast.
“However, the conflict has escalated in recent weeks with no timeline for a potential resolution, increasing the possibility for supply disruptions and price volatility,” the EIA warned.
“At the same time, we assess that significant surplus crude oil production capacity is available, which could be brought online in the event of a disruption,” it added.
In its October STEO, the EIA said OPEC+ production cuts continue to mean less oil is being produced globally than is being consumed and pointed out that oil is being withdrawn from inventories.
In the STEO, the EIA estimated that global oil inventories fell by 0.8 million barrels per day in the third quarter of 2024 and revealed that it expects inventories will fall by 0.6 million barrels per day through 1Q25.
“As a result, we expect Brent prices will rise from $74 per barrel in September to average $79 per barrel in 1H25, which is about $6 per barrel lower than in last month’s STEO,” the EIA said.
“By the middle of next year, we anticipate accelerated growth in oil production as OPEC+ increases its production and as production continues to grow in the United States, Guyana, Brazil, and Canada,” it added.
“We forecast oil inventories will increase by an average of almost 0.6 million barrels per day in 2H25 as production growth globally begins to outweigh global oil demand growth,” it continued.
The EIA also warned in its October STEO that, in addition to the escalating Middle East conflict, other sources of uncertainty remain.
“We now expect production in Libya will begin increasing in the coming weeks, following recent production outages,” it said.
“But production in Libya can be volatile and returning crude oil production volumes might fall short of our expectations,” it added.
“We also assess that OPEC+ producers are likely to continue to limit production below recently announced targets in 2025. However, if OPEC+ producers stick closely to announced production levels in 2H25, it would be a downside risk to oil prices,” it went on to state.
A research note sent to Rigzone by the JPM Commodities Research team last Friday showed that J.P. Morgan expects the Brent crude oil price to average $82 per barrel this year and $75 per barrel next year.
A quarterly breakdown in that note showed that J.P. Morgan sees the commodity averaging $80 per barrel in the fourth quarter of 2024, $82 per barrel in the first quarter of 2025, $77 per barrel in the second quarter, $73 per barrel in the third quarter, and $69 per barrel in the fourth quarter.
In a report sent to Rigzone by Standard Chartered Commodities Research Head Paul Horsnell on Tuesday, Standard Chartered projected that the ICE Brent nearby future crude oil price will average $87 per barrel in the fourth quarter of 2024, $89 per barrel in the first quarter of next year, $92 per barrel in the second quarter, $95 per barrel in the third quarter, and $93 per barrel in the fourth quarter.
“A short-covering rally has taken oil prices sharply higher over the past week,” Standard Chartered analysts, including Horsnell, stated in the report.
“Brent for December delivery settled at $80.93 per barrel on 7 October, a week-on-week increase of $9.23 per barrel (12.9 percent) making it the strongest over the week among the major commodity contracts,” they added.
“In our view, the entire move down from $80 per barrel to $70 per barrel was an unsustainable undershooting which carried little fundamental information. We see the unwinding of that move in similar terms; while attacks on Beirut provided some initial momentum higher, the rest of the increase was simply the start of a move towards less extreme speculative positioning,” they continued.
In the report, the Standard Chartered analysts noted that, once the unwinding of the undershoot in prices is accounted for, the market response to events in the Middle East, and particularly the threats made against Iranian energy infrastructure, appears extremely limited.
“Brent’s front-month settlement on 7 October was lower than the settlement for the equivalent days in 2021, 2022 and 2023 and prompt prices have simply returned to where they were as recently as late August,” they said.
“Despite the increase in prices, we detect little sign of any change to the overwhelmingly bearish sentiment that has dominated the oil market over the past three months,” they added.
“Many traders are seemingly still prepared to short oil aggressively if the daily news flow and market momentum allows,” they warned.
by Andreas Exarheas / Rigzone Staff | Friday, October 11, 2024