The U.S. Energy Information Administration (EIA) announced Tuesday that it anticipates benchmark crude oil prices to increase in the fourth quarter. This forecast is based on the Organization of Petroleum Exporting Countries (OPEC) and its allies delaying planned output increases, leading to larger-than-expected inventory drawdowns.
The EIA’s monthly Short-Term Energy Outlook predicts that international benchmark Brent crude will rise above $80 per barrel this month due to ongoing withdrawals from global oil inventories. The agency noted that with OPEC+ postponing its plans to reduce output cuts until December, the drawdown of oil from inventories will exceed previous estimates.
Despite rising market concerns about economic growth and oil demand, particularly in China, which have caused oil prices to dip, the EIA points out that OPEC+ production cuts are leading to lower global oil production compared to consumption.
The EIA’s updated forecast for spot Brent crude prices is $81.64 per barrel for the fourth quarter and $84.09 per barrel for 2025. These figures are lower than previous estimates of $85.97 and $85.71, respectively. For West Texas Intermediate (WTI), the forecast has been adjusted to $77.64 per barrel for Q4 and $79.63 per barrel for 2025, down from earlier predictions of $81.47 and $81.21.
Oil futures fell on Tuesday due to concerns over weakening demand, especially in China. This decline overshadowed any potential positive effects from disruptions caused by Tropical Storm Francine, which is expected to strengthen into a hurricane before making landfall on the Louisiana coast on Wednesday. WTI on the New York Mercantile Exchange dropped 4.3% to $65.75 per barrel, while Brent on ICE Futures Europe decreased by 3.7% to $69.18 per barrel.
The EIA projects global oil inventories will decline by 1 million barrels per day through the first quarter of 2025, compared to a 900,000-barrel decline per day in the third quarter. The market is expected to return to moderate inventory increases by mid-2025.
Additionally, the EIA revised its liquid fuels consumption growth estimates downward for 2024 and 2025. The 2024 estimate has been reduced to 900,000 barrels per day from 1.1 million barrels per day, and the 2025 estimate has been adjusted to 1.5 million barrels per day from 1.6 million barrels per day, due to revised demand projections for China and OECD Europe.
OPEC also revised its oil demand growth forecast for 2024 and 2025 earlier on Tuesday. The estimate for 2024 has been lowered to 2.03 million barrels per day from 2.11 million, and for 2025, it has been adjusted to 1.74 million barrels per day from 1.78 million.