The U.S. Energy Information Administration (EIA) released its latest monthly update of the Short-Term Energy Outlook (STEO), indicating a shift in global oil dynamics. According to the EIA, world oil demand projections for the current year have been revised downward, accompanied by an upward adjustment in output estimates. This adjustment suggests a more balanced market outlook compared to earlier forecasts.
The agency augmented its production forecasts for regions outside the Organization of the Petroleum Exporting Countries (OPEC), while concurrently lowering anticipated demand figures from developed economies. As per the updated STEO, global oil and liquid fuels consumption are anticipated to grow by 920,000 barrels per day (bpd) in 2024, reaching 102.84 million bpd. This growth projection is slightly lower than the previously forecasted 950,000 bpd increase in April’s STEO.
Meanwhile, total world crude oil and liquid fuels production are now expected to rise by 970,000 bpd to 102.76 million bpd in 2024, surpassing the previous estimate of an 850,000 bpd increase. The improved market equilibrium has prompted a downward revision in the EIA’s oil price projections for the remainder of the year.
The EIA now anticipates spot Brent crude prices to average $90 a barrel in the third quarter, declining further to $88.67 in the final quarter of the year. This contrasts with the prior forecast, which envisioned Brent prices exceeding $91 in the third quarter and surpassing $89 in the fourth.
For the United States, the leading oil producer globally, the EIA has slightly adjusted its production forecast for 2024 to 13.20 million bpd, still marking a record high but marginally below the previous projection of 13.21 million bpd. Looking ahead to the following year, the agency foresees a slightly larger record high of 13.73 million bpd, up from the earlier estimate of 13.72 million bpd.
Furthermore, the EIA predicts that certain producers within OPEC+ may opt to curtail their production once the current voluntary output cuts expire at the end of June. Although formal discussions on extending these cuts have yet to commence, three sources within OPEC+ indicated that the group could prolong them if demand fails to rebound. The next meeting of the group is scheduled for June 1.