The Energy Department’s analysis arm sees oil prices continuing to fall in coming years as rising global production bolsters commercial stockpiles, Ben writes.
Driving the news: The Energy Information Administration’s new monthly outlook — its first with 2024 projections — sees Brent crude averaging $83 per barrel this year and $78 in 2024.
- Prices averaged $101 last year and the global benchmark price is $81 this morning.
- That’s not cheap, but prices surged above $130 not long after Russia invaded Ukraine.
Why it matters: Oil prices affect the global economy but also reflect expectations about its strength or, more recently, weakness.
EIA’s take is the latest to show the global market weathering the shock of the war and sanctions on Russian energy.
Zoom in: It sees U.S. production hitting new annual records this year and in 2024, representing the largest source of global output growth in their forecast.
Yes, but: Production and price forecasts always come with big caveats.
- EIA notes the U.S. outlook “remains uncertain because of relatively low capital investment from oil producers,” and other wildcards include Russian production and Chinese COVID policies.
- Another variable is OPEC production decisions. Goldman Sachs is more bullish on prices than EIA and, in a new analysis, argues that “the pricing power of OPEC is now unusually high.”
Leave A Comment