Sep 2022

EIA Crude Oil Short-Term Energy Outlook

Crude oil prices were lower on average in August than they were in July before ending with a rapid decrease in the week before Labor Day. From August 29th through September 1st, the Brent crude oil price decreased $13/b and the WTI price decreased $10/b. The monthly average Brent front-month futures price was $98/b in August, about $7/b lower than in July, and the WTI price was $91/b, $8/b lower than in July. The lower prices in August likely reflected overall increases in global petroleum inventories. The increase in inventories came with ongoing growth in global production of crude oil and other liquid fuels, which we estimate reached 101 million barrels per day (b/d) in August, the highest global production since December 2019.

The EIA estimates that crude oil prices will generally remain near August/September average levels through the end of 2023. Although they expect average crude oil prices to mostly remain between $90/b–$100/b through next year, the possibility for significant volatility around those averages is high. Recent events contributing to increased uncertainty in the crude oil market and in our forecast include:
• – The impact of the recent OPEC decision to reduce crude oil production by 0.1 million b/d in October and whether there will be further production cuts in the future
• – The threat of increasing conflict following the outbreak of violent clashes in the Libyan capital of Tripoli
• – Uncertainty around the potential expiration of the current coordinated petroleum release from strategic reserves in November
• – The potential return to an Iran nuclear deal that could lift sanctions on the country and allow Iran’s crude oil exports into the market
• – The risk of hurricanes that could result in potential production outages and limited export traffic along the U.S. Gulf Coast