EIA hikes 2H 2023 Brent forecast to $86/b, lifts US growth outlook

Quantum Commodity Intelligence – The US Energy Information Administration (EIA) has raised its oil price outlook for the balance of 2023, upping its forecast to keep pace with current spot prices amid tightening supply/demand fundamentals.

The EIA said it sees Brent crude oil prices averaging $86/b in the 2H of 2023, up around $7/b from the previous forecast, while US GDP is forecast to increase 1.9% in 2023, up from a previous forecast of 1.5%.

In its monthly Short Term Energy Outlook published late Tuesday, the EIA cited an extension to Saudi Arabia's voluntary cuts in crude oil production, an improved US economic outlook and increasing global demand.

"We expect these factors will continue to reduce global oil inventories and put upward pressure on oil prices in the coming months," said the report, although added rising global oil production in 2024 keeps pace with oil demand and puts moderate downward pressure on crude oil prices beginning in Q2 2024.

It said global liquid fuels production will increase by 1.4 million bpd in 2023, with non-OPEC production increasing by 2.1 million bpd in 2023 partly offset by a drop in OPEC production.  

In 2024, global production is expected to increase by 1.7 million bpd, with 1.2 million bpd coming from non-OPEC countries, led by the US, Brazil, Canada, Guyana, and Norway.

"As a result of higher expected well-level productivity and higher crude oil prices, we expect US crude oil production will average 12.8 million bpd in 2023 and 13.1 million bpd in 2024, both annual records," said the EIA.

Meanwhile, the EIA added Associated natural gas production growth in the Permian Basin, driven by higher oil prices, has supported US dry gas production in 2023 despite a decline in prices.

The agency expects production to average about 104 billion cubic feet per day (Bcf/d) through the end of 2024, compared with 103 Bcf/d in 2Q23, as associated production offsets declines in natural gas direct drilling.