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EIA raises 2020 oil price forecast,

but lowers 2021 outlook

GLOBAL THE US Energy Information Administration coming months, EIA expects high inventory
(EIA) has raised its crude price forecast for the levels and surplus crude oil production capacity
whole of 2020. However, it also lowered the price will limit upward pressure on oil prices,” the EIA
forecast for 2021 slightly compared to its previ- added.
ous projections. The agency has also warned of The agency has also raised its US oil produc-
shorter-term production declines beyond Sep- tion outlook for 2020, while lowering it slightly
tember, though it expects output to pick up in the for 2021. It now expects US crude output to aver-
second half of 2021. age 11.38mn bpd in 2020 and 11.08mn bpd in
In its latest Short-Term Energy Outlook 2021, compared with 11.26mn bpd and 11.14mn
(STEO), released last week, the EIA revised its bpd respectively in the previous forecast. The
average Brent spot price forecast for 2020 to 2020 figure will mark a drop from output of
$41.90 per barrel and that of West Texas Inter- 12.2mn bpd in 2019. On a global
mediate (WTI) to $38.99 per barrel. This was a The EIA anticipates US production rising
slight upward revision from the August STEO, to 11.2mn bpd in September as production in level, the EIA
which had average Brent and WTI spot prices for the Gulf of Mexico returns after outages caused
2020 projected at $41.42 per barrel and $30.50 by hurricanes Laura and Sally in recent weeks. has lowered its
per barrel respectively. However, after September, the agency anticipates
At the same time, though, the EIA lowered that output will decline slightly, averaging just consumption
its 2021 price forecast, and now projects spot under 11.0mn bpd during the first half of 2021. growth forecast
Brent prices to average $49.07 per barrel next The EIA attributed this to its expectation that
year, compared with a forecast of $49.53 per new drilling activity will not result in enough for 2021 by
barrel previously. The agency’s 2021 forecast production to offset declines from existing wells.
for WTI has been lowered to $45.07 per bar- It anticipates that output will subsequently rise to 500,000 bpd
rel from $45.70 per barrel in the previous an average of 11.3mn bpd in the fourth quarter
outlook. of 2021. compared to its
The EIA explained that global oil markets had On a global level, the EIA has lowered its con- previous outlook.
shifted from liquid fuels inventories building at a sumption growth forecast for 2021 by 500,000
rate of 7.2mn barrels per day in the second quar- bpd compared to its previous outlook, to 99.6mn
ter of 2020 to drawing at a rate of 3.7mn bpd in bpd. This would still mark an increase of 6.5mn
the third quarter. It expects inventory draws of bpd on its 2020 forecast of 93.1mn bpd, how-
3.1mn bpd in the fourth quarter, before markets ever. The downward revision in 2021 was largely
become relatively balanced in 2021, with draws attributed to lower anticipated consumption
projected at 300,000 bpd. growth in China, which the EIA now forecasts
“Despite expected inventory draws in the to grow by 1.0mn bpd next year.™

Week 37 17•September•2020 www. NEWSBASE .com P15