Oil & Gas - Energy - Commodities - Resources (OILBRENT)

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This Week in Petroleum – July 8, 2021

Brent crude oil price forecast to average $72 per barrel in the second half of 2021

In the July Short-Term Energy Outlook (STEO), we revised our forecast crude oil prices up in the second half of 2021 (2H21) and in 2022. We forecast that the Brent crude oil price will average $72 per barrel (b) in 2H21 and $67/b in 2022, each up $6/b from the June STEO forecast (Figure 1). Our expectation of tighter global oil markets contributed to our upward revision of crude oil prices. We revised global production down by 210,000 barrels per day (b/d) in 2H21, leading to larger forecast inventory draws in 2H21 and smaller forecast inventory builds in 2022. We completed our forecast on July 1, before the July 2 meeting between members of OPEC and several nonmembers (OPEC+). Participants at the meeting did not reach an agreement on oil production levels and were scheduled to reconvene on July 5; however, that meeting was subsequently canceled. After OPEC+ countries could not reach an agreement, Brent crude oil prices rose, increasing to $78/b in intraday trading on July 6, the highest price since October 29, 2018. As of July 7, members of OPEC+ had still not reached a production agreement, and the price of Brent fell, closing at $73/b as future production levels remained unknown. The uncertainty over future crude oil supply led to an increase in volatility on July 7. In the July STEO, we forecast that OPEC and its OPEC+ partners will continue to increase crude oil production beyond July in response to rising global oil consumption.

The full report is available on the EIA website.https://www.eia.gov/petroleum/weekly/?src=email