Brent to average $60/Bbl in 2020: STEO

Brent crude oil spot prices will average $59 per barrel in the fourth quarter of 2019, then fall to $57/Bbl by the second quarter of 2020, $5/Bbl lower than forecast one month ago, the Energy Information Administration reported Tuesday in its October Short-Term Energy Outlook (STEO).

Despite the recent increase in supply disruptions, EIA expects downward oil price pressure to emerge in coming months as global oil inventories rise during the first half of 2020, Kallanish Energy reports.

STEO forecasts balances to tighten later in 2020 and expects Brent prices to rise to an average of $62/Bbl in the second half of next year. The resulting forecast average price in 2020 is $60/Bbl, $2/Bbl lower than forecast in the September STEO.

EIA’s October forecast recognizes a higher level of oil supply disruption risk than previously assumed, more than offset by increasing uncertainty about economic and oil demand growth in the coming quarters, resulting in a lowered oil price forecast.

The October STEO estimates crude oil production from OPEC averaged 28.2 million barrels per day (Mmbpd) in September.

Production was down 1.6 Mmbpd from August, the lowest level of OPEC production since November 2003 — due to disruptions in Saudi Arabia — and down 4.0 Mmbpd from September 2018.

The decrease in OPEC crude production during the past year was primarily the result of falling production in Iran and Venezuela, as well as the recent disruption in Saudi Arabia.

However, EIA/STEO estimates Saudi Arabia’s crude oil production returned to pre-outage levels as of Oct. 3. EIA forecasts annual OPEC crude oil production will average 29.8 Mmbpd in 2019, down by 2.1 Mmbpd from 2018, and 29.6 Mmbpd in 2020.

This post appeared first on Kallanish Energy News.