Inventory draws will keep Brent prices in mid-$80/bbl range in 2024 – EIA
The US Energy Information Administration (EIA) expects that the production cuts by OPEC+ will lead to a reduction in global oil inventories during February and March this year.
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The 2.2 million b/d voluntary cuts pledged by the Organization of the Petroleum Exporting Countries and Allies (OPEC+) during the first quarter of 2024 will result in an average crude draw of 800,000 b/d, the EIA said.
The crude draw will put upward pressure on Brent futures in the first quarter of this year, pushing prices in the range of mid-$80/bbl, the EIA says. “However, ongoing risks of supply disruptions in the Middle East create the potential for crude oil prices to be higher than our forecast,” it adds.
The oil market is expected to gradually return to inventory builds in 2025, the US energy watchdog predicts, “as slowing growth in oil demand is again outpaced by increasing oil production growth.”
Global oil inventories are expected to rebound after a decline in the first quarter of 2024. They are projected to increase by an average of 100,000 b/d in the last three quarters of 2024, and by an average of around 500,000 b/d in 2025, the US energy agency said in its January short-term energy outlook (STEO) report.
The EIA forecasts Brent’s price to average $81/bbl in December 2024 and fall to $78/bbl by December 2025.
Supply and demand estimates
Crude oil production in the US fell to 12.6 million b/d in January due to severe weather-related issues, the energy agency says. It expects US crude oil production to average 13.3 million b/d this month.
Global liquid fuels production will grow by 600,000 b/d in 2024, a decline from the 1.8 million b/d growth in 2023.
“Global growth in liquid fuels production is led by non-OPEC supply, which increases by almost 0.8 million b/d, offsetting an OPEC production decline of 0.2 million b/d,” the EIA says. The US, Brazil, Canada, and Guyana will lead the non-OPEC production growth.
The EIA projects that global demand for liquid fuel will rise by 1.4 million b/d in 2024 and 1.3 million b/d in 2025. The highest demand is expected in non-OECD Asian countries, with China and India leading the way, according to the agency's report.
“In OECD countries, liquid fuels consumption stays relatively flat in 2024 and 2025,” the EIA said.
By Aparupa Mazumder
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