Crude oil prices should remain around $50 per barrel during 2017, according to the U.S. Energy Information Administration’s Short-Term Energy Outlook released on Jan. 11.
EIA noted that its forecast has many uncertainties on both the supply and demand sides.
“Strong demand and the recent agreement among members of the Organization of the Petroleum Exporting Countries – along with some key non-OPEC oil producers – are putting upward pressure on crude oil prices,” EIA’s report stated. “However, forecast increases in global production should provide downward pressure on prices and mitigate the potential for significant crude oil price increases through 2018.”
EIA expects global petroleum and other liquid inventory builds to continue, but at a slowing rate, in 2017 and 2018.
“Despite increases in global oil inventories and U.S. oil rig productivity, market reactions to the November OPEC agreement to cut production by 1.2 million barrels per day starting in January 2017 contributed to rising oil prices in December, when average Brent prices were $9 per barrel above their November levels,” EIA stated.
Total U.S. crude oil production is estimated to have averaged 8.9 million b/d in 2016, down 500,000 barrels per day from 2015.
EIA expects that declines in Lower 48 production have largely ended and forecasts relatively flat production in the first quarter of 2017 at 6.7 million b/d, which will then increase to an annual average of 7.0 million b/d in 2018. EIA estimates global petroleum and other liquids production will increase to 97.5 million b/d in 2017.
U.S. crude oil prices on NYMEX were between $50 and $53 last week even though inventories of crude and refined oil rose sharply, with stocks hitting a six-year high.
Crude inventories rose 4.1 million barrels in the week to Jan. 6 even though crude stocks at the Cushing, Oklahoma, delivery hub for West Texas Intermediate fell by 579,000 barrels, EIA said. Read More…