The US Energy Information Administration revised its crude price forecast higher in its in its monthly Short-Term Energy Outlook released Jan. 12 amid tightened supply outlooks and upward-trending demand projections.
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The EIA now expects Brent crude prices to average at around $52.75/b in 2021, up $4.25/b from its December forecast, and at $53.42/b in 2022, and the WTI spot price to average at around $49.75/b in 2021, up $4/b from its most recent report, and at $49.79/b in 2022.
The upward revision comes amid a tighter global supply outlook. OPEC production is now expected to average at 27.2 million in 2021, EIA said, a downward revision of 300,000 b/d from its December forecast.
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Saudi Arabia announced at the end of the Jan. 5 OPEC+ meeting that it would voluntarily slash its February and March crude production by 1 million b/d. The extra cuts will more than offset modest quota increases granted to Russia and Kazakhstan and sets the stage for a tighten crude supply picture in the first quarter, EIA said.
OPEC production is forecast to rise 1.1 million b/d in 2022, EIA said.
Global demand is expected to trend higher as COVID-19 vaccine rollouts allow for a gradual resumption of pre-pandemic travel patterns.
Global liquid fuels consumption averaged at 92.2 million b/d in 2020, EIA said, down from 101.2 million b/d in 2019. Demand is expected to climb 5.6 million b/d in 2021 and a further 3.3 million b/d in 2022, EIA said.
The pace of the demand recovery is dependent on the effectiveness of vaccine distribution programs worldwide, and demand is not expected to reach pre-pandemic levels until early 2022, EIA said.
EIA held its 2021 US crude production forecast steady at 11.1 million, and said 2022 production would average at 11.5 million b/d.