News Oil & Gas

EIA: Crude prices likely to stay around $83 per barrel in 2024


NEW DELHI: Crude oil prices will average $83 per barrel for all of 2024 as recent OPEC+ production cuts are expected to offset lower demand growth, the US Energy Information Administration (EIA) has forecast.

The spot price of Brent crude oil has slumped to $76 per barrel, marking a significant drop from the $83 average seen in November and $91 in October. This decline was mainly driven by fears of weakening global oil demand.

“We expect OPEC+ production cuts will offset lower global demand growth, prevent increases in global oil inventories, and keep Brent prices above $80/barrel next year,” EIA said in its latest short-term energy outlook. The 2024 annual average Brent price forecast of $83 is, however, lower than the $93 the agency had predicted in its outlook last month.

On November 30, OPEC+, a group of two dozen oil-producing countries led by Saudi Arabia and Russia, announced voluntary production cuts of 2.2 million barrels per day (mbd) on top of the voluntary cuts announced previously. The market, however, disregarded the cuts and Brent futures have since fallen by about $10 per barrel to $73 per barrel. The paper market, which is several times bigger than the physical oil market, appears to be driving prices currently, an Indian oil industry executive said.

Falling oil prices would mean lower costs for Indian refiners and lower outgo of foreign exchange for the country as it imports nearly 87% of the oil it consumes. Domestic vehicle drivers are unlikely to be affected as state fuel retailers have stopped altering pump prices in line with international prices for more than one-and-a-half years.

India’s liquid fuel consumption is forecast to grow by an average of 0.3 mbd in both 2023 and 2024, EIA said. It would be 0.8 mbd for China in 2023 and 0.3 mbd in 2024.EIA estimates that the OPEC+ members have lowered crude oil production by 1.4 mbd in 2023, partly offsetting production growth of 2.4 mbd by non-OPEC+ producers.


Source link