By Anthony Harrup
The U.S. Energy Information Administration said Tuesday that its expects the Organization of Petroleum Exporting Countries and its allies to maintain at least some of their production cuts beyond the second quarter, supporting oil prices and keeping the global market in balance in the second half of the year.
"Our expectation of ongoing production restraint leads to our forecast of a relatively balanced oil market in 2H24, which we expect will keep oil prices near $90 a barrel for the remainder of 2024," the EIA said in its monthly Short Term Energy Outlook, referring to international benchmark Brent.
Stronger supply growth in 2025 will likely contribute to inventory builds, causing prices to fall to around $85 a barrel, the EIA adds, while warning that uncertainty over the situation in the Middle East still has the potential to push prices sharply higher.
The EIA estimated that OPEC+, as the group of OPEC producers plus Russia and others is known, has largely adhered to the voluntary output cuts of some 2.2 million barrels a day. The group is due to meet June 1 to assess market conditions and decide on production levels after the second quarter.
"We assume some OPEC+ members will continue to voluntarily limit production to keep global oil supplies balanced and to prevent significant builds in global oil inventories," the EIA said, adding that it expects a gradual unwinding to put back around 500,000 barrels a day in the second half of this year, and an additional 500,000 barrels a day on average in 2025.
The EIA projects global oil consumption this year will average 102.8 million barrels a day, closely matching its forecast for production. The balance weakens in its 2025 outlook, with production seen at 104.7 million barrels a day and consumption at 104.3 million barrels a day. Forecasts for U.S. crude oil production are unchanged from the previous month at 13.2 million barrels a day in 2024 and 13.7 million barrels a day in 2025.
The EIA lowered its estimate for the West Texas Intermediate average spot price this year to $83.05 a barrel from $83.78 previously, and for Brent to $87.79 from $88.55 a barrel. For 2025 it projects WTI at $80.88 and Brent at $85.38.
Write to Anthony Harrup at anthony.harrup@wsj.com
(END) Dow Jones Newswires
05-07-24 1419ET
