U.S. Energy Information Administration said Wednesday it expects higher crude oil prices in the second half of 2023 and into 2024 “because of moderate but persistent inventory drawdowns.” Inventory drawdowns occur when demand for a commodity is greater than its supply. EIA said, “Production cuts from OPEC members and forecast higher production consumption will lead to an average inventory drawdown of 0.4 million barrels per day between July 2023 and the end of 2024.”
EIA said the forecast Brent crude oil price will increase to the mid-$80-per-barrel range by the end of 2024 – up from the June 2023 average of $75 per barrel. And EIA expects West Texas Intermediate crude oil price will follow a similar path and maintain a discount to Brent of $5 per barrel.
EIA added, “Oil prices in 2023 have been considerably less volatile than they were between 2020 and 2022. However, changes in world production and consumption could result in significant differences in oil prices than in our forecast for 2024.”