The U.S. Energy Information Administration (EIA) recently revised down its 2024 and 2025 Brent crude oil price forecasts in its updated Short-Term Energy Outlook (STEO).
In its May STEO, EIA predicted spot Brent prices would average $87.79 per barrel in 2024 and $85.38 per barrel in 2025. EIA expects STEO to average $89.30 per barrel for the commodity in the second quarter and $90 per barrel in 2025. $88.67 per barrel in the third quarter, $88 per barrel in the first quarter of 2025, $86 per barrel in the second quarter, $85 per barrel in the third quarter, $1 in the fourth quarter of next year. That’s $82.66 per barrel.
In its previous STEO released in April, EIA predicted spot Brent prices would average $88.55 per barrel this year and $86.98 per barrel next year. In its STEO, EIA said the commodity will sell for $89.97 per barrel in the second quarter, $91.34 per barrel in the third quarter, $89.67 per barrel in the fourth quarter and $88.34 per barrel in the first quarter of next year. , and predicted it would sell for $87. The second and third quarters were $85.66 per barrel, and the fourth quarter was $85.66 per barrel.
In its latest STEO, EIA highlighted that the spot price of Brent crude averaged $90 per barrel in April, an increase of $5 per barrel since March and the fourth consecutive month of increases. .
“However, daily crude oil spot prices subsequently declined, and by May 2, the Brent crude oil spot price had settled at $84 per barrel,” EIA said in STEO, adding that declining global crude oil inventories led to a decline in April He added that prices had increased.
“Geopolitical tensions also supported oil prices amid the Iran-Israel conflict, adding uncertainty to already heightened tensions in the Middle East,” EIA said in its May STEO.
“Despite these tensions, significant spare oil production capacity has kept oil price volatility contained for much of this year,” the report added.
“If holders of excess capacity choose to deploy it, they have the potential to supply the oil market even in the event of short-term supply disruptions,” the report continued.
In STEO, EIA estimates that OPEC’s surplus production capacity will be approximately 4 million barrels per day until 2025. In addition, EIA assesses that global oil inventories will decrease in the first half of 2024 due to OPEC+’s voluntary production cuts, and estimates that global oil inventories will decrease on an average daily basis in the first half of this year. It increased by 300,000 barrels.
“We expect that some OPEC+ producing countries will continue to impose production restrictions even after the current OPEC+ voluntary production cut deadline expires at the end of June,” EIA said in STEO.
“Our expectation that production curtailments will continue leads to our expectation that the oil market will remain relatively balanced in the second half of 2024, with supply growth contributing to a $0.4 million increase in global oil inventories. We expect oil prices to remain near $90 per barrel for the remainder of 2024 until 2024, when production increases in barrels per day in 2025, with prices averaging $85 per barrel next year. It will go down to 50%,” he added.
“However, significant uncertainties remain, mainly around ongoing developments in the Middle East, which could increase oil price volatility and lead to sharp increases in oil prices,” the EIA warned.
Analysts at Standard Chartered wrote in a report to Rigzone last week that Brent prices plunged on May 1 and “losses continued in the following days.”
“The front-month contract hit an eight-week low of $82.41 per barrel during the early morning trade on May 7th. Brent July delivery fell $3.87 per barrel from the previous week to the May 6th settlement price 83.33 per barrel,” they added.
“Prior month headline prices were down $5.07 per barrel compared to the previous week, taking into account the retroactive expiration of the June contract,” they continued.
In the report, the analysts warned that in the very short term, their machine learning oil price model “indicates that the price downdraft may continue for a little longer.”
“This shows that negative volatility to the price relationship played a particularly prominent role in the May 13 settlement date week-on-week, which resulted in a week-on-week decline of $1.15 per barrel,” it added.
Standard Chartered said in a report that near-term ICE Brent prices will average $98 per barrel in the third quarter of this year, $106 per barrel in the fourth quarter and in the first quarter of 2025. It expects that to be $107 per barrel and $103 per barrel in the second quarter. In the third quarter, it was $111 per barrel.
The company said in a report that near-term ICE Brent prices will be $109 per barrel overall in 2025, $128 per barrel overall in 2026, and $115 per barrel overall in 2027. I predict that it will.
Macquarie strategists said in a separate report to RigZone last week that they expect Brent prices to remain in the $80-$90 range into the second quarter.
“At the moment, given the slow but steady progress towards a ceasefire and increasingly bearish fundamentals, the odds of oil falling below $80 are greater than the continued rise above $90. “We think it’s huge,” they added.
“From Q2 2024 onwards, we expect oil to weaken due to increased NOPEC supply, OPEC+ spare capacity returning to the market, and demand disappointment due to stubborn inflation,” they continued.
In a report sent to RigZone earlier in the month, JPMorgan analysts revealed that the fair value of Brent in May was unchanged at $88 per barrel.
“April average was $89 and our fair value was $86,” the analyst highlighted in its report.
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