The US Energy Information Administration (EIA) revised its 2024 crude oil price forecasts downward by over $1 per barrel on September 10, citing slowing global economic growth, weakening fuel demand in China, and signs of slowing job growth in the US. These factors have curbed any significant upward momentum in oil prices in recent months.
In its September Short-Term Energy Outlook, the EIA adjusted its 2024 Brent crude oil forecast, lowering it by $1.64 to $82.80 per barrel. The agency also cut its 2025 outlook by $1.62 to $84.09 per barrel. Similarly, the EIA reduced its 2024 forecast for West Texas Intermediate (WTI) crude to $78.80 per barrel, a $1.41 drop from last month’s estimate. The 2025 forecast was lowered by $1.58 to $79.63 per barrel.
Despite the reduction in its annual forecasts, the EIA expects crude oil prices to increase in the short term.
“We anticipate that oil prices will rise in the coming weeks and months as global consumption surpasses production,” said EIA Administrator Joe DeCarolis. “However, there are uncertainties in the market, such as demand fluctuations in China and potential supply disruptions in the Middle East, which could affect prices either way.”
Declining Oil Inventories
Before OPEC+ announced it would delay increasing production until December, the EIA had already predicted a significant drawdown in global oil inventories by the end of 2024. Now, with the extended production cuts, the agency expects even larger reductions in inventories.
“Global oil inventories are declining by an estimated 0.9 million barrels per day (b/d) in the third quarter of 2024,” the EIA reported. “We anticipate they will decrease by more than 1 million b/d through the first quarter of 2025. Consequently, we project Brent crude prices will rise from $74 per barrel in early September to an average of $82 per barrel in December and $83 per barrel in the first quarter of 2025.”
The EIA also noted that recent production disruptions in Libya have added a new layer of uncertainty to oil prices. Political instability has led to production halts across multiple oil fields, with output dropping from 1.1 million b/d earlier in 2024 to as low as 0.4 million b/d by the end of August.
“We expect Libya’s oil production to average around 0.6 million b/d for the remainder of the year,” the agency stated.
US Oil Production Outlook
The EIA slightly increased its 2024 outlook for US oil production by 20,000 b/d, raising the estimate to 13.25 million b/d. US crude output is projected to grow further in 2025, reaching 13.67 million b/d, although this is a 100,000 b/d reduction from the previous month’s forecast.
The agency also raised its global liquid fuels demand outlook for 2024 by 180,000 b/d, predicting demand will reach 103.08 million b/d. For 2025, the EIA increased its demand forecast by 100,000 b/d to 104.6 million b/d.
New Biofuels and Propane Forecasts
The EIA introduced new forecasts to track biofuel consumption, highlighting the increasing role of biomass-based diesel in the US fuel market. Biofuels are now accounting for a larger share of distillate fuel oil consumption.
“Although overall US distillate fuel oil consumption will drop slightly this year to an average of 4.1 million b/d, biofuels will make up 9% (360,000 b/d) of that total, up from 8% last year and 5% in 2022,” the report noted.
Additionally, the EIA launched monthly retail propane forecasts by US region. For the winter season, propane prices are expected to range from an average of $3.35 per gallon on the East Coast to $2.00 per gallon in the Midwest, which is in line with last winter’s prices.
Gasoline and Diesel Price Projections
Retail gasoline prices are forecasted to average $3.33 per gallon in 2024, down 5 cents from the previous estimate. In 2025, gasoline prices are expected to decline further, averaging $3.29 per gallon, a 4-cent decrease from last month’s forecast.
The EIA also lowered its forecast for retail diesel prices. The agency now expects diesel to average $3.78 per gallon this year, 6 cents lower than the prior estimate, and $3.73 per gallon in 2025, a 14-cent reduction from August’s estimate.