The U.S. Energy Information Administration (EIA), raised its Brent spot average price forecast for 2022, its January Short Term Energy Outlook (STEO), has revealed.
The EIA forecasts Brent spot prices averaging $74.95 per barrel this year, which marks a $4.90 increase on its previous 2022 projection of $70.05, which was made in the December STEO.
Looking ahead to 2023 for the first time, the latest STEO projects that average Brent spot prices will drop to $67.50 per barrel next year. Brent spot prices averaged $70.89 per barrel in 2021.
In its January STEO, the EIA projects that global oil inventories will increase at a rate of 500,000 barrels per day (bpd) in 2022, and 600,000bpd in 2023. It also estimates that global liquid fuels inventories fell by an average of 1.4 million (mbpd) in 2021, which were said to have grown by 2.1mbpd in 2020.
In addition to macroeconomic uncertainties, uncertainty about winter weather and consumer energy demand, also present a wide range of potential outcomes for energy consumption.
The organization expects global liquid fuels consumption will grow by 3.6mbpd in 2022 and by 1.8mbpd in 2023. OPEC crude oil production is expected to rise by 2.5mbpd to average 28.8mbpd in 2022, and by a further 100,000bpd in 2023 to average 28.9mbpd.
U.S. crude oil production is expected to average 11.8mbpd this year before rising to a new record of 12.4mbpd in 2023. The U.S. was shown to have averaged 11.2mbpd in 2021. Its current record of 12.3mbpd was set in 2019.
The EIA notes that its latest STEO continues to reflect heightened levels of uncertainty as a result of the ongoing Covid-19 pandemic.
The STEO said: “Notably, the Omicron variant of Covid-19 raises questions about global energy consumption.
“In addition to macroeconomic uncertainties, uncertainty about winter weather and consumer energy demand, also present a wide range of potential outcomes for energy consumption.
“Supply uncertainty in the forecast stems from uncertainty about OPEC+ production decisions and the rate at which U.S. oil and natural gas producers will increase drilling.” (RigZone)