New York — The US Energy Information Administration revised its crude price forecast higher in its monthly Short-Term Energy Outlook released March 9 amid tightened first quarter supply outlooks.
The EIA now expects Brent crude prices to average $60.67/b in 2021, up $7.47/b from its February forecast, and $58.51/b in 2022. EIA expects the WTI spot price to average $57.24/b in 2021, up $7.03/b from February, and at $54.75/b in 2022.
The upward revision stems from tightened supply outlooks during the first half of the year after the OEPC+ group March 4 unexpectedly extended the bulk of their output cuts through April.
Crude prices are expected to come under pressure in the second half of the year as increased supply comes online to balance markets. Global crude inventories are expected to decline 1.2 million b/d in the first half of 2021, EIA said, but then grow 400,000 b/d during the second half of the year.
The EIA expects the OPEC+ quota extension to push Brent prices to around $65-70/b during March and April, up more than $10/b from its previous month forecast, but expects prices will fall back to around $58/b for the back half of the year as rising supply slows global inventory draws.
Supply and demand are expected to reach balance for most of 2022, EIA said.
Global liquid fuels consumption is now slated to average 97.5 million b/d in 2021, a downward revision of 200,000 b/d from last month's forecast but 5.3 million b/d above 2020 levels. Meanwhile, 2022 demand is now expected to climb 3.8 million b/d to 101.3 million b/d, an increase from the February forecast calling for a 3.5 million b/d increase.
US crude production averaged 10.4 million b/d in February, down 500,000 b/d from January output. The decline was due mostly to shut ins caused by extreme low temperatures across the US south, particularly Texas. The winter weather is likely to lead to aggregate crude production losses of 20-25 million barrels, according to S&P Global Platts Analytics.
But expectations of higher crude prices are likely to see more US production come online over the next two years, EIA said. Its outlook for 2021 production was revised 100,000 b/d higher to 11.1 million and 2022 output is now seen averaging 12 million b/d in 2022, an upward revision of 500,000 b/d from the February report.
Notably, this month's STEO is the first to incorporate a moratorium on new leases for oil and natural gas exploration on federal lands enacted by the Biden administration. The order is not expected to have an impact in 2021, but in 2022 it is expected to reduce US output by less than 100,000 b/d on average.