EIA Revises Crude Oil Forecast

Increasing Supply Disruption Risks Globally

The U.S. Energy Information Administration has revised its price forecast for Brent crude oil upward, on the back of growing risks in global oil markets.

The latest forecast suggests further uncertainty for breakbulk operators in the sector as the EIA forecasts Brent spot prices will average US$70 per barrel in 2019 and US$67 per barrel in 2020.

“Brent crude oil price forecast reflects tighter expected global oil market balances in mid-2019 and increasing supply disruption risks globally,” a apokesperson for the IEA said.

OPEC Production to Fall

Published in the EIA’s Short-Term Energy Outlook, or STEO, report for May 2019, the findings also point to a decline in crude oil production from the Organization of the Petroleum Exporting Countries, or OPEC, with average of just 30.3 million barrels per day) in 2019, down by 1.7 million from 2018.

“In 2020, EIA expects OPEC crude oil production to fall by 400,000 barrels per day to an average of 29.8 million. Production in Venezuela and Iran account for most of the OPEC output declines in 2019 and in 2020, but EIA expects these declines to be partially offset by production increases from other OPEC members,” the report’s authors note.

Based in Washington, The EIA is a principal agency of the U.S. Federal Statistical System
and collects, analyzes, and disseminates energy information to promote sound policymaking, efficient markets, and public understanding

'Strong Growth' for Natural Gas
In the natural gas segment, the outlook is more positive, with the EIA forecasting “strong growth in U.S. natural gas production to put downward pressure on prices in 2019 and in 2020.”
“EIA expects Henry Hub natural gas spot prices will average US$2.79 per British thermal unit in 2019, down 36 cents from 2018. The forecasted 2020 average Henry Hub spot price is $2.78 per British thermal unit,” the report notes.
The agency also predicts that natural gas storage injections will outpace the previous five-year average during the April-through-October injection season and that inventories will reach 3.7 trillion cubic feet at the end of October, 15 percent higher than 2018 levels.