Oil Prices to Fall through 2023 on Expected Inventory Builds – EIA
Prices of crude oil will decline through 2023 as increased production contributes to inventory builds in the second quarter onwards, the United States Energy Information Administration (EIA) reported Wednesday.
In the first quarter, the EIA forecasts that global oil markets will be balanced and inventory builds from the second quarter to the fourth quarter of 2023 will put downward pressure on crude oil prices.
Brent crude oil prices averaged $71 per barrel in 2021, and prices are expected to fall from the current price of around $80 per barrel litre to an average of $75 per in 2022 and $68 per barrel in 2023, the EIA said.
For six consecutive quarters, ending with the fourth quarter of 2021, global oil consumption outpaced oil production, which resulted in persistent withdrawals from global oil inventories and higher oil prices.
Production remained restrained due to curtailments by the members of the Organization of the Petroleum Exporting Countries and their allies, or OPEC+, as well as investment restraint from U.S oil producers and other supply disruptions, the agency noted.
Oil markets are essentially balanced in the first quarter of the EIA’s forecast. From the second through the fourth quarter, the EIA expects inventory builds will average 0.7 million b/d. In 2023, global inventories will build by an average of 0.6 million b/d, the EIA said.
Read Also: Crude Oil Prices Rise as U.S Inventory Drops
The EIA also projects that the recent West Texas Intermediate crude price, which averaged more than $70 per barrel during most of the second half of 2021, and average forecast WTI prices of $74 to a barrel during the first half of 2022, will contribute to an increased number of active drilling rigs and production growth in the US.
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