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Lower crude oil inventories and higher prices predicted

Published by , Editorial Assistant
Hydrocarbon Engineering,


The EIA expects global oil production to be lower than previously expected after OPEC+ announced it will extend its crude oil production cuts through 2024 and Saudi Arabia announced an additional voluntary oil production cut of 1 million bpd in July 2023.

In its June Short-Term Energy Outlook (STEO), the EIA forecasts the Brent crude oil price to average US$79/bbl in 2H23 and US$84/bbl in 2024 — an increase of US$1/bbl and US$9/bbl from last month’s forecasts, respectively.

Despite the OPEC+ extension and Saudi Arabia’s additional cuts, the EIA expects overall growth in global oil production in 2023 and 2024, led by increased production from non-OPEC countries. EIA also expects consumption of liquid fuels such as gasoline and jet fuel to establish new record highs in 2023 and 2024, largely driven by non-OECD countries — especially China.

“We expect to see demand for travel continue to increase, which drives our forecast for record consumption of petroleum products,” said EIA Administrator Joe DeCarolis. “The petroleum market remains highly uncertain, so we will continue monitoring developments and tracking supply and demand dynamics.”

The EIA expects that US crude oil production will set annual record highs in 2023 and 2024, although growth in domestic crude oil production is slowing. Slower production growth may reflect a combination of the use of capital to increase dividends and repurchase shares instead of investments in new production; the effects of tighter labour markets and higher costs; and increased pressure on oilfield supply chains.

Other highlights from the June STEO include:

  • The EIA estimates that US dry natural gas production reached a record average of 104 billion ft3/d in April 2023, and expects natural gas production to remain just below that level the rest of the year. Natural gas prices at the benchmark Henry Hub are about 70% lower than their peak last year, which is decreasing new gas-only drilling. But associated natural gas production will increase in the Permian Basin in the short-term, offsetting decreases in other regions. “Drilling in the Permian Basin typically produces a blend of hydrocarbons that includes crude oil and natural gas. So as producers increase their crude oil production in the region, we expect natural gas production to increase as well,” said DeCarolis.
  • The EIA expects a 24% increase in electricity produced by solar power this summer compared with last summer. The increase is largely driven by an increase in solar capacity — solar has been the leading source of new electricity generating capacity so far this year.

Read the article online at: https://www.hydrocarbonengineering.com/refining/07062023/lower-crude-oil-inventories-and-higher-prices-predicted/

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