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Global oil inventories expected to drop
EIA says additional production after first quarter to increase inventory, put downward pressure on Brent, to $72 in fourth quarter Kristen Nelson Petroleum News
The Brent crude oil spot price is expected to remain close to its current $74 per barrel in early 2025 but drop to $72 per barrel in the fourth quarter on inventory builds, averaging $74 per barrel for the year, the U.S. Energy Information Administration said in its December Short-Term Energy Outlook released Dec. 8. Brent averaged $82 per barrel in 2023 and is forecast to average $80 per barrel this year. The price fell slightly in November following the Israeli-Hezbollah cease fire, which removed some of the risk premium while "signs of weakening global oil demand growth, primarily centered on slowing oil demand growth in China, continued to weigh on prices," EIA said.
The Dec. 5 announcement by OPEC+ that it was extending production cuts until April is expected to cause global oil inventories to decrease by some 700,000 barrels per day in the first quarter. After the first quarter EIA expects OPEC+ to generally raise production in line with production targets announced at the Dec. 5 meeting, and said those targets align with production levels the agency expects will keep oil markets "relatively balanced next year."
Global inventory volumes are expected to end 2025 at about their current level. The agency estimates that ongoing OPEC+ cuts contributed to some 0.4 million barrels per day of inventory withdrawals this year, with the extension of those cuts to cause a fall averaging 0.7 million bpd in the first quarter, but thereafter the OPEC+ ramp up and continued non-OPEC+ growth is expected to average a 0.1 million bpd build over the remainder of 2025.
EIA said it continues to see two main causes of price uncertainty: the ongoing Middle East conflict and OPEC+ members willingness to maintain voluntary production cuts.
Production, consumption EIA said it continues to forecast global oil consumption at less than pre-pandemic levels, with consumption of liquid fuels forecast to increase by 0.9 million bpd this year and 1.3 million bpd in 2025, both less than the pre-pandemic 10-year average increase of 1.5 million bpd, and below growth seen in the 2021-23 pandemic recovery.
Almost all global oil consumption in its forecast is driven by non-OECD countries, the agency said, with much of the growth in Asia, particularly India, where growth is driven by rising demand for transportation fuel. OECD oil consumption is forecast to be relatively unchanged between 2024 and 2024.
US production EIA said U.S. crude oil production is forecast to increase by 0.3 million bpd in 2025, up from an average of 12.9 million bpd in 2024 to 13.2 million bpd and increasing to 13.5 million bpd in 2025.
With increased U.S. production and decreased U.S. refinery runs, EIA is forecasting U.S. net imports of crude oil will be down in 2025. It said net imports have remained close to 2023 volumes.
U.S. jet fuel stocks, which reached a 6-year high in August, are forecast to decline through 2025, "reversing a trend of generally rising stocks over the past two years," EIA said, with jet fuel consumption remaining below pre-pandemic levels and declining in some months compared to 2023.
Natural gas The average spot price for natural gas for the remainder of the winter heating season is forecast to be about 40% above the November spot price, EIA said, despite the expectation that natural gas inventories will remain above the 5-year average. The price fell in November for the second month in a row on mild winter weather.
"Recent natural gas prices have been historically low, so a colder winter than last will draw on storage and raise prices to some extent," said EIA Administrator Joe Carolis. "We expect natural gas prices will remain well below the high prices we saw in 2021 and 2022."
The benchmark Henry Hub natural gas spot price is expected to increase from just about $2 per million British thermal units -- the November price -- to an average of $3 per million Btu for the rest of the winter heating season.
Brent averaged $2.50 per million Btu in 2023 and is forecast to average $2.20 per million Btu this year and $3 in 2025.
U.S. dry natural gas production is forecast to average 103 billion cubic feet per day in the first quarter of 2025, flat compared with the fourth quarter of 2024, EIA said, and to increase 1% in 2025 on increased Permian and Eagle Ford production, where gas production is associated with crude oil.
The agency also expects more production from the Haynesville region because of higher prices and increased demand from nearby new liquefied natural gas export projects.
U.S. LNG exports are forecast to average nearly 12 bcf per day this year, nearly flat with 2023, the EIA said, and then increase 15% to 14 bcf per day in 2025 "as export capacity expands with Plaquemines LNG and Corpus Christi LNG Stage 3, which are both expected to start LNG exports by the end of December."
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