EIA estimates crude supply tightening to keep Brent above $90/bbl in Q4 2023

Global oil inventories are estimated to fall by 200,000 b/d in the fourth quarter of 2023 due to extended supply cuts announced by Saudi Arabia and Russia, the US Energy Information Administration (EIA) has said.

PHOTO: A pumpjack and an oil refinery in Seminole, West Texas. Getty Images

In its September short-term energy outlook report, EIA has forecast the Brent spot price to average $93/bbl in the fourth quarter of 2023. This indicates an upward revision of $7/bbl, from the agency's outlook in August.

The estimated decline in global oil inventories will keep Brent's price above the $90/bbl mark through the end of this year and in the first quarter of 2024.

The agency has incorporated Saudi Arabia's recent announcement to continue its voluntary crude oil production cut of 1 million b/d through the end of this year. Saudi Arabia's announcement was followed by Russia's pledge to cut exports by 300,000 b/d for the rest of the year.

However, Brent's price will start to decline in the second quarter of 2024, averaging at $88/bbl as global oil inventories are expected to rise during that period, EIA said in its flagship report.

“The inventory builds next year largely reflect slowing oil demand growth, non-OPEC oil production growth, and the end of Saudi Arabia’s voluntary production cuts,” said the US energy market watchdog.

PHOTO: Brent crude oil spot price and global inventory changes. EIA

Demand and supply outlook

Global oil production is expected to increase by 1.2 million b/d in 2023, “despite recent voluntary decreases in production from OPEC+,” according to the EIA report.

Global production is estimated to increase by another 1.7 million b/d in 2024, to approximately 103 million b/d. Non-OPEC countries will be the main driver of this growth, EIA said.

The agency expects oil production from non-OPEC countries to grow by 2 million b/d in 2023 and 1.3 million b/d in 2024, led by the US, Brazil, Canada and Guyana.

Meanwhile, crude oil production from OPEC countries is expected to decline by 800,000 b/d in 2023 and grow by 400,000 b/d in 2024.

“We expect Russia’s production will decline by 0.3 million b/d on average this year and remain relatively unchanged in 2024,” the EIA said.

By Aparupa Mazumder 

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