WTI Crude oil prices are expected to average $44.24 per barrel next year, the EIA said in its latest Short-Term Energy Outlook (STEO), with the forecast price not much higher than the $42 spot price early on Wednesday.
This year, WTI Crude prices are expected to average $38.24 per barrel, according to the EIA, which revised down slightly its estimates for the U.S. benchmark and for the international Brent benchmark compared to its estimates in the October STEO.
In the November STEO this week, the EIA sees Brent Crude prices averaging $40.61 in 2020 and $46.59 next year. This compares to estimates of $41.19 for this year and $47.07 a barrel for 2021 in the October STEO. The October outlook also had higher price projections for WTI compared to the November forecasts. The October average estimate for 2020 was $38.76 a barrel, while the forecast for 2021 was $44.72.
EIA sees the record high global cases of COVID-19 and the return of Libyan oil sooner than market participants had expected as the main headwinds to oil prices now. The administration expects global inventories to continue falling in the coming months, but “high global oil inventory levels and surplus crude oil production capacity will limit upward pressure on oil prices,” it said.
Brent prices will likely stay near $40 a barrel through the end of 2020, the EIA said, and warned of downside risks.
“Uncertainty about responses to increasing COVID-19 cases presents downside risk to EIA’s global oil demand forecast for the fourth quarter of 2020 and first half of 2021,” according to the EIA, which also cut its estimate for global oil consumption between Q4 and mid-2021 by 400,000 bpd compared to the estimate from October.
“The pace of oil demand recovery will affect not only expectations of petroleum inventory withdrawals but also could affect planned oil supply increases” from the OPEC+ group, whose production “will generally be tailored to match the pace of global oil demand recovery,” the EIA said.