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The U.S. Energy Information Administration (EIA) lowered its 2022 Brent spot average price forecast in its April Short Term Energy Outlook (STEO) report, which was released recently.
According to the latest STEO, the EIA now sees Brent spot prices averaging $103.37 per barrel this year, which marks a near $2 drop from its previous 2022 Brent spot price average price forecast of $105.22 per barrel, which was made in the EIA’s March STEO.
Looking ahead to 2023, the EIA increased its Brent spot price forecast in its latest STEO. The organization’s April STEO sees Brent spot prices averaging $92.57 per barrel, while its March STEO saw Brent spot prices averaging $88.98 per barrel.
“The Brent crude oil spot price averaged $117 per barrel in March, a $20 per barrel increase from February,” the EIA stated in its April STEO.
“Crude oil prices increased following the further invasion of Ukraine by Russia. Sanctions on Russia and other actions contributed to falling oil production in Russia and created significant market uncertainties about the potential for further oil supply disruptions. These events occurred against a backdrop of low oil inventories and persistent upward oil price pressures,” the EIA added in the STEO.
In its latest STEO, the EIA outlined that it expects the Brent price will average $108 per barrel in the second quarter of 2022 and $102 per barrel in the second half of 2022, before falling next year. The organization highlighted, however, that this price forecast was “highly uncertain”.
“Actual price outcomes will depend on the degree to which existing sanctions imposed on Russia, any potential future sanctions, and independent corporate actions affect Russia’s oil production or the sale of Russia’s oil in the global market,” the EIA added in the STEO.
“In addition, the degree to which other oil producers respond to current oil prices, as well as the effects macroeconomic developments might have on global oil demand, will be important for oil price formation in the coming months,” the EIA continued.
In the April STEO, the EIA highlighted that, although it had reduced Russia’s oil production in its forecast, it still expected that global oil inventories will build at an average rate of 0.5 million barrels per day from the second quarter of 2022 through the end of 2023, which it said it expects will put downward pressure on crude oil prices.
“However, if production disruptions, in Russia or elsewhere, are more than we forecast, the resulting crude oil prices would be higher than our current forecast,” the EIA warned.
A recent report from BofA Global Research revealed that the company was maintaining its $102 per barrel average Brent crude oil price forecast for 2022 and 2023.
Earlier this month, Fitch Solutions Country Risk & Industry Research announced that it had made a large upward revision to its Brent crude price forecast this quarter. Analysts at the company said they expected prices to average $100 per barrel in 2022 and $90 per barrel in 2023, which marked an $18 rise from the company’s previous 2022 forecast and a $7 rise from its previous 2023 forecast.
At the time of writing, the price of Brent crude oil stood at $111.28 Per barrel.
Brent has fluctuated over recent weeks, closing at $97.93 per barrel on February 25, $127.98 per barrel on March 8, $98.02 per barrel on March 16, $121.6 per barrel on March 23, and $98.48 per barrel on April 11. This time last year, the price of the commodity closed around the $67 per barrel mark.
