The US Energy Information Administration (EIA) has raised its 2025 forecast for crude oil prices, citing lower global oil inventories in the first quarter of the year.
The EIA’s Short-Term Energy Outlook (STEO), released on Tuesday, indicates that oil prices will rise due to OPEC+ extending its production cuts. This will result in global oil inventories decreasing by an average of 500,000 barrels per day (bpd) in the first quarter of 2025.
As a result, the agency expects crude oil prices to rise by $2 per barrel from the December 2024 average, reaching $76 per barrel in early 2025.
However, after this brief price increase, the EIA predicts oil prices will decline from mid-2025 through the end of 2026, as global oil production grows faster than oil demand.
For 2025, the EIA forecasts that Brent crude will average $74.31 per barrel, while West Texas Intermediate (WTI) will average $70.31 per barrel. These estimates have been adjusted upward from last month’s report, which predicted $73.58 for Brent and $69.12 for WTI.
In its forecast for 2024, the agency estimated that Brent crude will average $80.56 per barrel, and WTI will average $76.60 per barrel.
The EIA also pointed out two key factors that could introduce price uncertainty. First, there is a risk that OPEC+ members may ease their production limits, which could lower prices. Second, rising tensions in the Middle East could disrupt oil supply and affect price trends.
US Crude Production Outlook Upgraded
The EIA has also raised its forecast for US crude oil production. It now expects production to average 13.55 million bpd in 2025, up from 13.21 million bpd in 2024. This revision is 30,000 bpd higher than last month’s forecast.
Globally, oil production is expected to average 104.36 million bpd by the end of 2025, while global demand is anticipated to reach 104.1 million bpd.
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