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The US EIA has forecast that US oil markets will experience a closer balance between supply and demand this year. At the same time, the EIA has revised its forecast for 2025 crude prices downwards compared with its Short-Term Energy Outlook (STEO), published in July.
Despite recent drops in crude oil prices, the EIA said it anticipates an increase in the latter half of 2024. July saw the Brent crude oil spot price close at $81 per barrel (bbl), whereas the monthly average stood at $85/bbl. The EIA forecasts “the Brent price to reach between $85/bbl and $90/bbl by year-end”.
The EIA also revised its projection for West Texas Intermediate crude prices downward to $80.21/bbl for the year, representing a 2.2% drop from its earlier forecast of $82.03/bbl.
EIA expects continued oil production cuts from OPEC+ will reduce global oil inventories through the first quarter of 2025, likely pushing oil prices up.
Global oil inventories, estimated to have decreased by 400,000 barrels per day (bpd) in H1 2024, are projected to decline by 800,000bpd in H2, the EIA said. The reduction in inventories is partly due to the continued production cuts implemented by OPEC+.
The EIA increased its forecast for US oil demand in 2024 by 100,000bpd, bringing it to 20.5 million barrels per day (mbbl/d). It maintained its previous global oil demand growth forecast for 2024, anticipating a yearly rise in consumption of 1.1mbbl/d, to reach a total of 102.9mbbl/d.
The forecast predicts that daily average natural gas consumption for electricity generation will be around 46 billion cubic feet per day in August, a 2% decrease from the previous month. Natural gas production is expected to remain consistent with July levels.
The Henry Hub price is anticipated to stay below $2.50/MBtu (million British thermal units) until October due to declining consumption and stable production. However, with the seasonal rise in space heating demand and increased liquefied natural gas exports from new facilities, the Henry Hub price is projected to average around $3.10/MBtu from November to March.
“The good news from a consumer perspective is that even though we expect oil prices to increase, we expect gasoline prices through this year and next year to remain lower than they were in 2023,” said EIA administrator Joe DeCarolis.
