EIA's Latest Short-Term Outlook Highlights Uncertainty in Oil Markets
EIA's Latest Short-Term Outlook Highlights Uncertainty in Oil Markets
With the possibility of supply disruptions and demand destruction "relatively
balanced," the U.S. Energy Information Administration (EIA) is forecasting
Brent crude spot prices will average $64/bbl in the second half of 2019 and
$65/bbl in 2020.
"The combination of oil supply disruption risk and lower economic growth
expectations creates uncertainty in the pace of global oil inventory
withdrawals and prices," EIA said Tuesday in its latest Short Term Energy
Outlook. "However, given the uncertainty in the risk factors discussed, prices
could break out of the mid-$60/b range if the supply or demand concerns
materialize in the coming months."
The U.S. agency said it expects prices for West Texas Intermediate (WTI) crude
oil to average $5.50/bbl less than Brent prices during the fourth quarter of
this year and in 2020, narrowing from the $6.60/bbl spread during July.
The agency said the narrowing spread reflects its assumption that
transportation constraints from the Permian Basin to Gulf Coast refineries and
export terminals will ease in the coming months. Last month, EIA forecast the
Brent-WTI spread to average $4.00/bbl in 2020. The agency said the change
reflects its assumptions about the costs of moving crude by pipeline from the
hub at Cushing, Okla., to the Gulf Coast.
On the supply side, EIA forecasts U.S. crude oil production will hit record
levels of 12.3 million b/d in 2019 and 13.3 million b/d in 2020.
EIA forecasts that global oil inventories will increase by 100,000 b/d in 2019
and 300,000 b/d in 2020.
When examining the competing pressures on oil prices, EIA noted continued
tensions in the Middle East and the Strait of Hormuz presents a risk of supply
disruptions, although crude exports from the region have not yet been disrupted.
Meanwhile, demand concerns include a slowdown in global economic growth and in
global manufacturing activity.
The EIA forecast said it appears U.S. regular retail gasoline prices peaked for
the year in May at an average $2.86/gal and will likely fall to an average
$2.64/gal in September. Regular gasoline retail prices will average $2.62/gal
in 2019 and rise to an average $2.71/gal in 2020, the agency forecast.
--Steve Cronin, scronin@opisnet.com
Copyright, Oil Price Information Service
balanced," the U.S. Energy Information Administration (EIA) is forecasting
Brent crude spot prices will average $64/bbl in the second half of 2019 and
$65/bbl in 2020.
"The combination of oil supply disruption risk and lower economic growth
expectations creates uncertainty in the pace of global oil inventory
withdrawals and prices," EIA said Tuesday in its latest Short Term Energy
Outlook. "However, given the uncertainty in the risk factors discussed, prices
could break out of the mid-$60/b range if the supply or demand concerns
materialize in the coming months."
The U.S. agency said it expects prices for West Texas Intermediate (WTI) crude
oil to average $5.50/bbl less than Brent prices during the fourth quarter of
this year and in 2020, narrowing from the $6.60/bbl spread during July.
The agency said the narrowing spread reflects its assumption that
transportation constraints from the Permian Basin to Gulf Coast refineries and
export terminals will ease in the coming months. Last month, EIA forecast the
Brent-WTI spread to average $4.00/bbl in 2020. The agency said the change
reflects its assumptions about the costs of moving crude by pipeline from the
hub at Cushing, Okla., to the Gulf Coast.
On the supply side, EIA forecasts U.S. crude oil production will hit record
levels of 12.3 million b/d in 2019 and 13.3 million b/d in 2020.
EIA forecasts that global oil inventories will increase by 100,000 b/d in 2019
and 300,000 b/d in 2020.
When examining the competing pressures on oil prices, EIA noted continued
tensions in the Middle East and the Strait of Hormuz presents a risk of supply
disruptions, although crude exports from the region have not yet been disrupted.
Meanwhile, demand concerns include a slowdown in global economic growth and in
global manufacturing activity.
The EIA forecast said it appears U.S. regular retail gasoline prices peaked for
the year in May at an average $2.86/gal and will likely fall to an average
$2.64/gal in September. Regular gasoline retail prices will average $2.62/gal
in 2019 and rise to an average $2.71/gal in 2020, the agency forecast.
--Steve Cronin, scronin@opisnet.com
Copyright, Oil Price Information Service
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