A lower price for crude oil is in the forecast for the next few months from the U.S. Energy Information Admininstration.
In a report this week, the EIA said the smaller expected inventory draw from December 2021 through February 2022 will also contributed to the lower prices. The forecast said global petroleum inventory draws for the time period in question will average 170,000 barrels a day, down from the November forecast of 420,000 b/d.
“The smaller forecast draws contribute to our lower crude oil price forecast, and we expect the price of Brent will average $72/b during this period, down from an average of $80/b in the November STEO,” stated the EIA.
“We still expect relatively large annual inventory builds to put downward pressure on crude oil prices in 2022. In the December STEO, we forecast that global inventories will build by 480,000 b/d in 2022 (Figure 2). We expect the price of Brent will average $70/b in 2022, a slight decrease from our forecast of $72/b in the November STEO.”
Here is how the EIA continued:
“In our December STEO, we expect that global petroleum production will average 100.9 million b/d in 2022, a 5.3 million b/d (5.5%) increase compared with 2021. We forecast that non-OPEC petroleum production will increase by 3.0 million b/d in 2022, driven by rising production in the United States and Russia and, to a lesser extent, Brazil. We expect U.S. petroleum production will increase by 1.3 million b/d from 2021 to 20.1 million b/d in 2022, production in Russia will increase by 790,000 b/d to 11.6 million b/d in 2022, and production in Brazil will increase by 340,000 b/d to 4.1 million b/d in 2022. We forecast that petroleum production from OPEC will increase from 31.6 million b/d in 2021 to 33.9 million b/d in 2022. These production increases outpace the global forecast increase in demand, which we expect to rise from 96.9 million b/d in 2021 to 100.5 million b/d in 2022.
We made only limited adjustments to our global demand forecast to account for the uncertainty about the effects of the Omicron variant of COVID-19. How Omicron will affect petroleum markets and the broader economy is not yet clear; however, some travel restrictions have already been put in place. Based on preliminary estimates, we decreased our 1Q22 global consumption forecast by 100,000 b/d because of the Omicron variant and another 450,000 b/d because of historical revisions to consumption.”
Click here for entire EIA report.