The US Energy Information Administration (EIA) revised up its 2022 forecast for global crude oil prices by more than 7% from its previous December estimate late on Tuesday.
In the January Short-Term Energy Outlook (STEO), the EIA revised up the price of Brent by 7% to an average of $74.95 per barrel and American benchmark West Texas Intermediate (WTI) by 7.5% to $71.32 a barrel.
In 2023, the agency predicts that Brent will decline to $67.50 per barrel and WTI to $63.50 a barrel.
Mindful of the growing uncertainty in global oil markets in 2022, the EIA said the extent to which the omicron variant will affect economic activity and oil consumption this year is still unknown.
“In late 2021, some restrictions to mitigate the spread of COVID-19 began to return in many regions, notably Europe, even before the omicron variant surfaced. These restrictions, in combination with increased measures to combat the omicron variant, raised the possibility that global oil consumption could decline in the coming months and added downward pressure to oil prices,” the statistics agency said.
The EIA forecasts that global oil production will outpace global oil consumption during both 2022 and 2023, resulting in rising global oil inventories.
“We expect global oil inventories will rise by an average of 0.5 million barrels per day (bpd) in 2022 and by 0.6 million bpd in 2023 and that these inventory builds will generally put downward pressure on crude oil prices,” it said.
The agency also forecasts that global oil consumption will grow by 3.6 million bpd in 2022 reaching 100.5 million bpd and by 1.8 million bpd in 2023 to 102.3 million bpd.
OPEC crude oil production averaged 26.3 million bpd in 2021, up 0.7 million bpd from 2020, the agency recalled and forecast that average OPEC crude oil production will increase by an additional 2.5 million bpd to average 28.8 million bpd in 2022 and average 28.9 million bpd in 2023.
“Our OPEC crude oil production forecast is subject to considerable uncertainty, driven both by country compliance with existing production targets and uncertain future global demand growth,” it said.
Crude oil output in the US is forecast to average 11.8 million bpd in 2022, up from 11.1 million bpd in 2021.
In 2023, crude oil output in the country is expected to reach its highest annual average on record at 12.4 million bpd.
By Sibel Morrow