World benchmark Brent crude oil will average $61 per barrel in 2019 and $65 in 2020, according to the U.S. Energy Information Administration’s January Short-Term Energy Outlook released on Wednesday.
This marks an increase from the end of 2018, but overall it will remain lower than the 2018 average of $71 per barrel, the EIA said.
Although the agency forecasts that oil prices will remain lower than during most of 2018, the prediction includes some increase in prices from December 2018 levels in early 2019 to keep up with demand growth and support the increased need for global oil inventories to maintain five-year average levels of demand cover.
EIA expects crude oil prices to continue to rise in late 2019 and early 2020 because of an increase in refinery demand for light-sweet crude oil, which is the result of regulations from the International Maritime Organization that will limit the sulfur content in marine fuels used by ocean-going vessels.
According to the forecast, global oil production growth in 2019 will be led by non-OPEC countries, particularly the U.S. Non-OPEC producers, on the other hand, are expected to increase oil supply by 2.4 million barrels per day (b/d) in 2019, which will offset forecast supply declines from OPEC members, resulting in an average of 1.4 million b/d in total global supply growth in 2019.
In 2020, the administration expects oil production to increase by 1.7 million b/d because of production growth in the U.S., Canada, Brazil, and Russia, while overall OPEC crude oil production is forecast to remain flat.
EIA forecasts global oil demand to grow by 1.5 million b/d in 2019 and in 2020, with China as the leading contributor in both years.
The agency also estimates that global petroleum and other liquid fuels inventories grew by an average rate of 0.4 million b/d in 2018 and by an estimated 1.0 million b/d in the fourth quarter of 2018.
According to the outlook, growth in liquid fuels production in the U.S. and in other non-OPEC countries will contribute to global oil inventory growth rates of 0.2 million b/d in 2019 and 0.4 million b/d in 2020.
By Hale Turkes
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