|
EIA: Brent to average $82 in 4th quarter
September Short-Term Energy Outlook forecasts global oil consumption to exceed production causing reduction in global oil reserves
Kristen Nelson Petroleum News
Although Brent crude oil prices dropped to $73 per barrel Sept. 6, the U.S. Energy Information Administration said in its September Short-Term Energy Forecast, released Sept. 10, that it expects Brent to return to above $80 per barrel in September and to average $82 per barrel in the fourth quarter of the year.
"We expect that oil prices will be pushed upward in the coming weeks and months as global oil consumption outpaces production," said EIA Administrator Joe DeCarolis. "There are uncertainties in the market, including demand growth in China and supply disruptions in the Middle East, that could push prices higher or lower in the short term."
The agency noted increasing concern over economic growth and oil demand but attributed an expected decline in global oil reserves to continued OPEC+ production cuts, after OPEC+ members said they would delay production increases -- previously set to begin in October -- to December.
Brent averaged $82 per barrel this year and EIA is forecasting an average of $83 per barrel this year and $84 per barrel in 2025.
Less oil produced than consumed The "OPEC+ production cuts mean less oil is being produced globally than is being consumed," the agency said.
EIA said oil has primarily traded within a relatively tight range this year, with the spot price averaging $82 per barrel in August, the eighth consecutive month with averages between $80 and $90 per barrel.
Market expectations for global oil demand growth have been reduced by economic concerns including slowing economic activity and reduced Chinese fuel demand along with signs of slowing U.S. job growth, all limiting any recent upward price momentum, EIA said.
The agency said it estimates global oil inventories are falling by some 900,000 barrels per day in the third quarter, and the drop is expected to grow to more than 1 million bpd through the first quarter of 2025, which is expected to result in an increase in average Brent prices to $82 per barrel in December and $83 per barrel in the first quarter of 2025, with a return to moderate inventory builds expected by mid-2025 as OPEC+ increases production, with global oil inventories expected to increase by an average of 500,000 bpd in the second half of 2025.
Production growth outside of OPEC+ is expected to remain strong, with petroleum and other liquid fuels increasing by 300,000 bpd this year, compared to a decrease of 1.4 million bpd in OPEC+ production offset by 1.7 million bpd increases led by the United States, Canada, Guyana and Brazil. Production is expected to increase by 2.4 million bpd next year, 800,000 bpd from OPEC+ and 1.6 million bpd from other countries.
Natural gas Henry Hub natural gas spot prices are expected to remain relatively flat through the end of the year, EIA said, and then rise in 2025, with U.S. production of natural gas expected to reach nearly 105 billion cubic feet per day in 2025, surpassing a record set in 2023.
The price at Henry Hub averaged $2.50 per million British thermal units in 2023 and is expected to drop to $2.20 this year before rising to $3.10 in 2025, with the price increase reflecting U.S. production which does not keep pace with increasing U.S. liquefied natural gas exports, forecast by EIA to increase from 12 billion cubic feet per day in 2023 and 2024 to 14 bcf per day in 2025.
U.S. dry natural gas production is forecast to remain relatively flat over the next few months "as some producers, particularly in the Marcellus and Haynesville regions, continue to curtail production until prices rise," EIA said, with production forecast to average 104 bcf per day in the fourth quarter before rising to 105 bcf per day next year. Most of that increase is expected in late 2025, the agency said, when new LNG facilities are expected to ramp up production.
More solar Solar is continuing to provide most of the increase in U.S. electricity generation, an increase forecast at 37% this year, followed by a 2% increase in power generation from natural gas and smaller increases in wind and nuclear.
Power from utility-scale solar-powered facilities is expected to see an increase of 34% in 2024, with solar generating capacity growing by 12 gigawatts in the first half of the year, accounting for 59% of all capacity addition. EIA said solar capacity growth is paralleled by battery storage development, providing "power to the grid during the rapid ramping up or down of solar power during the early morning and evening hours." The annual growth in solar is expected to increase the most in Texas and California.
| 