The US Energy Information Administration (EIA) revised down its forecast for crude oil prices for 2025 over the relatively lower global oil inventories.
Brent crude oil spot price will remain close to its current level in 2025 as oil markets will be relatively balanced on an annual average basis, according to the EIA's Short-Term Energy Outlook (STEO) released Tuesday.
The EIA forecast assumes OPEC+ will generally raise production in line with the new target levels through much of 2025, and global oil inventories will end 2025 near their current volume.
The extension of OPEC+ production cuts is forecasted to cause inventories to fall by around 700,000 barrels per day (bpd) in the first quarter of 2025. However, as the EIA expects 'the subsequent ramp up in OPEC+ production and continued supply growth outside of OPEC+ will lead to an average inventory build of about 100,000 bpd over the remainder of 2025.
'We forecast that inventory builds will put some downward pressure on crude oil prices later in 2025,' the EIA said, adding that the 2025 annual price of Brent will be below this year's average.
As a result, the EIA forecasts that average Brent oil prices will be $73.58 per barrel and the American West Texas Intermediate (WTI) will register $69.12 per barrel in 2025. In the previous month's report, these figures were $76.06 and $71.60, respectively.
For 2024, the agency estimated that Brent crude to average $80.49 per barrel and WTI to average $76.51 per barrel.
Pointing to two main sources of price uncertainty the EIA said that an escalation in the ongoing Middle East conflict has the potential to reduce oil supplies, and regional political uncertainty can increase the risk premium.
The potential for weakening commitment among OPEC+ producers also to continue cutting production adds downside risk to oil prices, according to the EIA.
- US crude production forecast slightly revised down
Crude oil production in the US is expected to average 13.24 million bpd in 2024, up from 12.93 million bpd last year. The figure is around 10,000 bpd less than the previous month's forecast.
Next year, crude oil output in the country is expected to reach 13.52 million bpd, down by about 10,000 bpd from last month's prediction.
The agency also estimated that the average global oil production will be 102.59 million bpd at the end of the year and 104.24 million bpd next year.
Global oil demand, meanwhile, is anticipated to reach 103.03 million bpd in 2024, while demand is expected to be around 104.32 million bpd in 2025.
By Firdevs Yuksel
Anadolu Agency
energy@aa.com.tr