EIA revises crude price forecasts higher amid Saudi-tightened supply outlooks

New York — The US Energy Information Administration revised its crude price forecast higher in its monthly Short-Term Energy Outlook released Feb. 9 amid tightened first quarter supply outlooks.

The EIA now expects Brent crude prices to average around $53.20/b in 2021, up 45 cents/b from its January forecast, and at $55.19/b in 2022, and the WTI spot price to average around $50.21/b in 2021, up 46 cents/b from its most recent report, and at $51.56/b in 2022.

The upward revision is due to higher prices in January, the EIA said, which in turn are the result of Saudi Arabia announcing Jan. 5 that it would unilaterally cut production by 1 million b/d in February and March.

Quota compliance for the broader OPEC+ group climbed to 101% in January from 98.5% the month prior, an S&P Global Platts Survey found Feb. 8. The group boosted its crude oil production by a collective 440,000 b/d last month, below an allocated quota of 500,000 b/d, the survey found.

The EIA expects the Saudi cuts to push Brent prices to around $56/b during the first quarter of 2021, but prices will fall back to around $52/b for the rest of the year as rising supply slows global inventory draws.

The near-term price outlook shave also benefited from the rollout of COVID-19 vaccines, EIA said, however travel restrictions in China during the Lunar New Year and across most of Europe continue to present headwinds to the outlook.

Global liquid fuels consumption is now slated to average 97.7 million b/d in 2021, a downward revision of 200,000 b/d from last month's forecast and fully 3.5 million b/d below 2019 levels. But 2022 demand is now expected to climb 3.5 million b/d to 101.2 million b/d, an increase from the January forecast calling for a 3.3 million b/d increase next year.

The EIA said US crude production will average 11 million b/d in 2021, a downward revision of 100,000 b/d from the previous forecast. But 2022 output was unchanged at 11.5 million b/d.