U.S. Energy Information Administration (EIA) on Tuesday noted the Brent oil price remained low despite the recent OPEC+ deal, but added it expected the prices to average $48 a barrel next year. It also warned that the forecast was subject to an increased level of uncertainty due to the COVID-19 situation.
EIA reminded that reduced economic activity related to the COVID-19 pandemic has caused significant changes in energy supply and demand patterns. Crude oil prices, in particular, have fallen significantly since the beginning of 2020, largely driven by reduced oil demand because of COVID-19 mitigation efforts.
"Despite the April agreement between the Organization of the Petroleum Exporting Countries (OPEC) and partner countries (OPEC+) to reduce production levels beyond the end of the STEO forecast period, crude oil prices have remained at some of their lowest levels in more than 20 years," it said.
Brent crude oil prices averaged $18 per barrel (b) in April, a decrease of $13/b from the average in March. EIA forecasts Brent crude oil prices will average $34/b in 2020, down from an average of $64/b in 2019.
"EIA expects prices will average $23/b during the second quarter of 2020 before increasing to $32/b during the second half of the year. EIA forecasts that Brent prices will rise to an average of $48/b in 2021, $2/b higher than forecast last month, as EIA expects that declining global oil inventories next year will put upward pressure on oil prices," EIA said.
"Although all market outlooks are subject to many risks, the May edition of EIA’s Short-Term Energy Outlook remains subject to heightened levels of uncertainty because of the effects on energy markets of mitigation efforts related to the 2019 novel coronavirus disease (COVID-19) are still evolving," EIA said.
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