Washington — A tighter expected global oil market balance this summer and increasing global supply risks caused the US Energy Information Administration on Tuesday to increase its 2019 by nearly 11% from last month.
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In its May Short-Term Energy Outlook, EIA said that Brent prices will average $69.64/b in 2019 and $67/b in 2020, up $6.86/b and $5/b, respectively, from April's forecast.
"The increase accounts for near-term tightness in oil markets and increasing supply disruption risks in several oil-producing countries," EIA Administrator Linda Capuano said in a statement. "EIA expects some tightness in global oil markets during the second and third quarters of 2019, but anticipates that growing production in the United States and key OPEC countries will ensure that global supplies continue to meet demand moving forward."
EIA forecasts WTI to average $62.79/b in 2019 and $63/b in 2020, up $6.66 and $5 from last month's forecast.
In its report Tuesday, EIA said that prices have increased for four consecutive months this year, reflecting a decline in global oil inventories, heightening perceptions of oil supply risk.
The end of waivers for US sanctions on Iranian crude exports, unrest in Venezuela and fighting in Libya have all contributed to higher forecast oil prices, EIA said.
These higher prices are expected to boost US production, Capuano said. EIA forecasts US oil production to average 12.45 million b/d in 2019 and 13.38 million b/d in 2020, up 150,000 b/d and 350,000 b/d from last month's forecast.
EIA forecasts OPEC oil output to average 30.29 mil b/d in 2019 and 29.85 mil b/d in 2020, down 240,000 b/d and 420,000 b/d, respectively, from last month's forecast.
"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 agency said.
EIA forecasts Venezuela oil output fell to 830,000 b/d in April, down 10,000 b/d from March and a 700,000 b/d decline from April 2018.
Iranian crude oil production averaged 2.3 million b/d in April, down 300,000 b/d from March, while Saudi output averaged 9.95 million b/d in April, up 100,000 b/d.
"EIA expects increases in crude oil production in Saudi Arabia, the United Arab Emirates, Kuwait, and Russia to largely backfill the lower Iranian production, though these countries will likely wait until their June meeting to make any decisions regarding production increases," the agency said in its report Tuesday.
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