Despite the recent decline in crude oil prices, the US Energy Information Administration (EIA) continues to expect crude oil prices will rise in second-half 2024.
The Brent crude oil spot price ended July at $81/bbl, compared with an average for the month of $85/bbl. In the August issue Short-Term Energy Outlook (STEO), EIA said it expects the Brent price will return to $85-90/bbl by yearend.
“Rising crude oil prices in our forecast are the result of falling global oil inventories. We estimate global oil inventories decreased by 400,000 b/d in first-half 2024 and will fall by 800,000 b/d in second-half 2024. Inventory withdrawals stem in part from ongoing OPEC+ production cuts,” EIA said.
Although EIA expects crude oil prices to rise in the coming months, its latest forecast for the annual average Brent crude oil price in 2025 is $86/bbl, down from a forecast of $88/bbl in the July STEO, owing mostly to reduced oil consumption.
“We anticipate that the market will gradually return to moderate inventory builds in mid-2025 after the expiration of voluntary OPEC+ supply cuts in fourth-quarter 2024 and as forecast production growth from countries outside of OPEC+ begins to outweigh global oil demand growth. We estimate that global oil inventories will increase by an average of 300,000 b/d in the second half of 2025. We forecast the Brent price will average $86/bbl in 2025 and fall to $83/bbl by the end of the year,” EIA said.
World oil production, consumption
EIA forecasts that global production of petroleum and other liquid fuels will increase by 570,000 b/d in 2024, the net result of a 1.3 million-b/d decline from OPEC+ countries and a more than 1.8 million b/d-increase from countries outside of OPEC+, led by growth in the US, Canada, Guyana, and Brazil. Global production of liquid fuels will increase by 2.1 million b/d in 2025, as the OPEC+ voluntary production cuts unwind throughout the year. OPEC+ production increases by 700,000 b/d, combined with 1.4 million b/d of production growth from countries outside of OPEC+.
On the demand side, EIA projects that global liquid fuel consumption will grow by 1.1 million b/d in 2024 and 1.6 million b/d in 2025, lower than the previous forecast of 1.8 million b/d. The primary reason for this reduction is attributed to China, where EIA expect slowing economic growth will continue to reduce diesel consumption.
“China’s GDP for second-quarter 2024 grew 4.7% from last year, slightly less than the government’s 5% target, reflecting slower investment in the country’s real estate and construction sectors. We now forecast consumption of petroleum and liquid fuels consumption will grow in China by about 300,000 b/d in 2024 and in 2025, which would be less than the 2015–2019 average growth rate of 500,000 b/d,” EIA said.
