EIA lifts forecast for oil prices, US crude output in 2018-19

The US Energy Information Administration (EIA) has raised its forecast for Brent and West Texas Intermediate (WTI) crude spot prices in 2018 and 2019, according to the agency’s latest Short Term Energy Outlook (STEO).

The EIA expects Brent crude prices to average $74.43 per barrel (bbl) in 2018, up 2.2 percent from September’s forecast of $72.84/bbl. In 2019, Brent is seen to average $75.06/bbl, up 1.9 percent from last month’s outlook.

In the fourth quarter of 2018, Brent crude oil prices are expected to average $81/bbl, which is $5/bbl higher than forecast in the September STEO.

“This increase reflects recent price movements incorporated into EIA’s forecast, the higher starting point for the forecast, and the possibility that crude oil prices could remain elevated while market participants assess how much crude oil production in Iran will decline in the coming months and the ability of other oil producers to offset lost volumes,” the report said.

Meanwhile, the forecast for WTI spot prices has been raised 2.1 percent to $68.46/bbl in 2018. The EIA has raised its WTI forecast for 2019 by 3.3 percent to $69.56/bbl.

US crude production is seen at 10.74 mbd in 2018, up 0.8 percent from last month’s forecast of 10.66 mbd for the year.

In 2019, the agency expects production at 11.76 mbd, compared to 11.5 mbd in last month’s outlook.

“The higher production reflects higher-than-expected increases to Texas and North Dakota production in July, revising up the baseline of the forecast, and a response to higher forecast prices,” the EIA said.

The agency also estimated that US crude oil production averaged 11.1 mbd in September, up slightly from August levels.