The EIA expects production cuts from OPEC, and forecasts higher petroleum consumption to lead to an average inventory drawdown of 0.4 million bpd from July 2023, through to the end of 2024.
The forecast supports the Brent crude oil price rising to the mid-US$80/bbl range by the end of 2024, up from the June 2023 average of US$75/bbl. It also forecasts that the West Texas Intermediate crude oil price will follow a similar path and maintain a US$5/bbl discount to Brent.
On 4 June 2023, OPEC members agreed to extend crude oil production cuts through to the end of 2024. The cuts had previously been set to expire at the end of 2023. Following this meeting, Saudi Arabia also announced a new voluntary oil production cut of 1 million bpd for July and August 2023. The EIA estimate that Saudi Arabia produced 10.1 million bpd in June 2023, equivalent to approximately 10% of world petroleum and other liquid fuels production. It also forecasts OPEC petroleum and other liquid fuels production will average 33.9 million bpd in 2024, down 1.2 million bpd from the 2022 peak of 35.1 million bpd in September of that year.
Forecasts for world petroleum consumption have increased slightly in recent months, in contrast to the downward revisions in world petroleum production. In the EIA’s latest forecast, it is expected that non-OECD petroleum and liquid fuels consumption will grow by 1.6 million bpd from 2022, to average 55.1 million bpd in 2023, followed by 1.4 million bpd of growth in 2024, to average 56.5 million bpd. China and India lead the consumption growth.
Consumption in OECD countries has not returned to pre-pandemic levels, and the EIA forecasts that it will not do so by 2024. In this context, petroleum inventories are within the normal range, which suggests that markets have mostly returned to inventory levels adequate to meet demand. Nevertheless, the EIA expects OECD petroleum days of supply to move to the low-end of the range by late 2024.