The Energy Information Administration (EIA) has raised its Brent price forecast for the coming months.
EIA, in its June Short-Term Energy Outlook (STEO), now expects Brent prices to average $69/bbl in June and $68/bbl in third-quarter 2021, $4/bbl and $5/bbl higher, respectively, than last month’s forecast.
But larger downward oil price pressures are expected to emerge later in 2021 and into 2022 as forecast global oil supply outpaces slowing oil demand growth.
This forecast keeps prices near or slightly below current levels through the third quarter and incorporates recent price increases and EIA’s forecast of mostly balanced oil markets in the coming months.
Given announced increases in production from the Organisation of the Petroleum Exporting Countries (OPEC), EIA expects production to grow more rapidly in second-half 2021 to keep pace with rising demand. In the forecast, global oil consumption rises by 2.8 million b/d from second-quarter to second-half 2021 while global oil production rises 4.3 million b/d during the same period, balancing the 1.5 million b/d of global oil inventory draws during the second quarter.
EIA noted, however, that the forecast “remains subject to heightened levels of uncertainty related to the ongoing economic recovery from the COVID-19 pandemic.”
Despite rising COVID-19 case counts in some countries, particularly India, global oil demand remained higher than supply in May, contributing to continued global withdrawals from inventories of crude oil and petroleum products.
However, EIA estimates withdrawals fell to 1.2 million b/d in May, compared with average monthly withdrawals of 2.1 million b/d since June 2020.
EIA estimates that 96.2 million b/d of petroleum and liquid fuels was consumed globally in May, an increase of 11.9 million b/d from May 2020 but 3.7 million b/d less than in May 2019.
Scheduled increases in production targets contributed to OPEC crude oil production reaching 25.5 million b/d in May, its highest level since April 2020.