Brent Oil Expected To Average $58 In 2nd Half 2021, $55 In 2022 - US Energy Agency

WASHINGTON (Pakistan Point News / Sputnik - 10th March, 2021) Global oil prices are expected to decline after June as additional supply arrives, with Brent averaging $58 per barrel in the second half of this year and $55 in 2022, the US Energy Information Administration (EIA) said in its March Short-Term Energy Outlook (STEO) report on Tuesday.

"EIA continues to expect downward crude oil price pressures will emerge in the coming months as the oil market becomes more balanced," the report said. "Brent crude oil prices in the forecast average $58/b in the second half of 2021. For 2022, the EIA expects Brent to return to an average of $55 per barrel."

Brent, which hit 14-month highs of $71.38 per barrel earlier this week, traded at under $68 on Tuesday as oil markets lost some of their highly-charged momentum evident since the start of the year.

Production cuts since April by the 13-member Organization of the Petroleum Exporting Countries (OPEC) and its ten allies steered by Russia - a global oil cartel now known as OPEC+ - have helped drain a massive crude glut caused by the coronavirus pandemic.

Due to the agreed OPEC+ cuts in production, oil inventories in the so-called OECD group of developed countries have reached near-normal five-year levels, EIA data shows. That has helped lift US crude's West Texas Intermediate (WTI) benchmark from a historic negative pricing of minus $40 per barrel in April to nearly $68 on Monday.

The report acknowledged that Brent will likely average between $65 and $70 per barrel during March and April or more than $10 above the forecast it made last month.

However, EIA still forecasts lower prices in the second half, saying some of the bullish factors behind oil could recede in the coming months, particularly enhanced production cuts of 1 million barrels per day (bpd) that Saudi Arabia has targeted for February, March and April.

The EIA said it expects crude production by OPEC to average 25.3 million bpd in April or 1.6 million bpd lower than the forecast it initially made. But for the month of May, EIA saw OPEC production rising to 26.6 million bpd.

"This increase reflects Saudi Arabia ending voluntary cuts of 1 million bpd, along with the relaxation of cuts that were extended through April at the March 4 OPEC+ meeting," the EIA added.

The agency said it has assumed that OPEC will produce 27.9 million bpd on the average in the second half of the year as the broader OPEC+ alliance typically increases output then to meet higher global needs.