In the June STEO, EIA forecast that despite the extension of OPEC+ production cuts, global liquid fuels production will increase by 1.5 million b/d in 2023 and by 1.3 million b/d in 2024, primarily because of growth from non-OPEC producers. EIA also raised its 2023 world oil demand growth forecast by 30Kbpd, seeing an increase of 1.59m bpd this year. However, the EIA lowered next year’s demand forecast by 20Kbpd to a 1.70 mbpd increase. They see most of this growth comes from non-OECD countries.
Following the OPEC+ announcement on June 4 to extend crude oil production cuts through 2024, the EIA forecast global oil inventories to fall slightly in each of the next five quarters. The EIA expect these draws to put some upward pressure on crude oil prices, notably in late-2023 and early-2024.
Among the leading sources of non-OPEC growth are the United States, Norway, Canada, Brazil, and Guyana. The EIA forecast that OPEC crude oil production will fall by 0.6 million b/d in 2023 and then increase by 0.3 million b/d in 2024, which is lower than our previous forecast of 0.6 million b/d growth for next year.
Oil Price Forecasts
The OPEC+ cuts result in inventory draws in our forecast, which in turn trigger higher crude oil prices, mainly in 2024, compared with our May STEO.
- Brent crude oil spot price averaged $76 per barrel (b) in May, down $9/b from April.
- Crude oil prices fell in May as ongoing uncertainty about economic conditions continued to limit expectations for global oil demand growth.
- Despite the recent weakness in oil prices during May, EIA expect that global oil inventories will decline in each quarter from the third quarter of 2023 (3Q23) through 3Q24, which they expect will put gradual upward pressure on oil prices.
- EIA forecast that global oil inventories will decrease slightly in 2024, compared with last month’s STEO that forecast inventory growth of 0.3 million b/d.
- EIA now forecast that the Brent crude oil price will increase from an average of $79/b in the second half of 2023 ($1/b higher than in our Mary STEO) to an average of $84/b for 2024 ($9/b higher than in our May STEO).
STEO Global Oil Consumption Highlights
- EIA forecasts global liquid fuels consumption increases by 1.6 million b/d in 2023 and 1.7 million b/d in 2024, led by growth in non-OECD Asia.
- Significant uncertainty remains around global economic growth and the potential impact on oil demand over the forecast period.
STEO Global Oil Production Highlights
- Despite the extension of OPEC+ production cuts, EIA forecast global liquid fuels production will increase by 1.5 million b/d in 2023 and by 1.3 million b/d in 2024, primarily because of growth from non-OPEC producers.
- Among the leading sources of non-OPEC growth are the United States, Norway, Canada, Brazil, and Guyana.
- EIA forecast that OPEC crude oil production will fall by 0.6 million b/d in 2023 and then increase by 0.3 million b/d in 2024, which is lower than our previous forecast of 0.6 million b/d growth for next year.
- In 2021 and 2022, more than half of the increase in production of liquid fuels globally occurred in member countries of the Organization of the Petroleum Exporting Countries, or OPEC. EIA expect that percentage to shift in 2023 and 2024 when non-OPEC countries will account for more production growth as a number of long-term development projects come online.
- Forecast remains uncertain as a number of factors, including global economic growth, Russia’s production, and possible delays in expected project start-up dates could affect the production outlook.
Russia and other countries add uncertainty to non-OPEC production forecast
EIA anticipate heightened uncertainty around forecasts. They assume Russia will be able to reroute some of its petroleum exports subject to EU sanctions. This assumption involves the willingness for other countries to continue to buy Russia’s exports and the continued availability of tanker capacity to transport Russian petroleum.
EIA warns oil production in other non-OPEC countries may be affected by increasing macroeconomic risks around the global banking sector and the access to capital, as well as the potential for delay or disruption to the startup of expected oil projects, including those impacted by environmental, social, and governance concerns.
Source: EIA
From The TradersCommunity Desk