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The U.S. Energy Information Administration (EIA) has raised its Brent and West Texas Intermediate (WTI) oil price forecasts for 2020, the organization’s latest short-term energy outlook (STEO) has revealed.
Brent and WTI spot prices will average $41.90 per barrel and $38.99 per barrel, respectively, this year, according to the EIA’s September STEO. These figures mark a slight increase from the EIA’s August STEO, which forecasted an average Brent spot price of $41.42 per barrel and an average WTI spot price of $38.50 per barrel in 2020. The EIA’s July STEO projected an average Brent spot price of $40.50 per barrel and an average WTI spot price of $37.55 per barrel this year.
Looking ahead to 2021, the EIA reduced its price predictions in its latest forecast. September’s STEO shows an average Brent spot price of $49.07 per barrel and an average WTI spot price of $45.07 per barrel. Back in August’s STEO, these figures stood at $49.53 per barrel and $45.53 per barrel, respectively, and in July’s STEO they were $49.70 per barrel and $45.70 per barrel, respectively.
In its September STEO, the EIA highlighted that Brent crude oil spot prices averaged $45 per barrel in August, which it noted was $2 per barrel higher than July’s average. The organization also outlined that Brent prices in August were up $26 per barrel from the average price in April.
“The increase in oil prices has occurred as EIA estimates global oil markets have shifted from global liquid fuels inventories building at a rate of 7.2 million barrels per day (MMbpd) in the second quarter to drawing at a rate of 3.7 MMbpd in the third quarter,” the EIA stated in its September STEO.
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“EIA expects inventory draws in the fourth quarter of 3.1 MMbpd before markets become relatively balanced in 2021, with forecast draws of 0.3 MMbpd,” the EIA added.
“Despite expected inventory draws in the coming months, EIA expects high inventory levels and surplus crude oil production capacity will limit upward pressure on oil prices,” the EIA added.
The organization warned that its latest STEO remains subject to heightened levels of uncertainty “because mitigation and reopening efforts related to the 2019 novel coronavirus disease continue to evolve”.
The EIA noted that its latest STEO assumes U.S. gross domestic product declined by 4.6 percent in the first half of 2020 from the same period a year ago and will rise beginning in the third quarter of 2020, with year-over-year growth of 3.1 percent in 2021. The U.S. macroeconomic assumptions in the outlook are based on forecasts by IHS Markit.
As of September 9, 3:36pm CEST, there have been more than 27 million confirmed cases of Covid-19, with 894,983 deaths, according to the latest data from the World Health Organization (WHO). The worst affected region as of September 9, in terms of confirmed cases and deaths, has been the Americas, WHO data shows.
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