EIA outlook shifts following OPEC oil cuts

The Energy Information Administration increased its projected Brent crude oil price after the recent announcement by OPEC+ to cut oil production through the end of 2023.

That OPEC+ cut is expected to total 1.2 million barrels per day. As a result, EIA is forecasting a Brent crude oil average price of $85 per barrel for 2023. This is a $3 increase from EIA’s March short-term outlook.

However, EIA said in a news release it expects the global production of liquid fuels to exceed 101 million barrels per day for the first time.

In addition, the reduction in OPEC’s liquid fuel production is partially offset by an increase in Russian production in the remainder of 2023.

“The OPEC+ production cut is certainly significant, but we expect growing global production —especially in North and South America — to offset those cuts,” Joe DeCarolis, EIA administrator, said. “We expect that world oil production and demand for petroleum products will be relatively balanced this year. The biggest risk to our April forecast is slower-than-expected economic growth, which would limit growth in demand for fuels such as gasoline and jet fuel.”

U.S. exports of petroleum products set a record in 2022 due to Europe’s ban on petroleum imports from Russia as well as increased demand from China, said EIA.

In 2023, U.S. refinery production of liquid fuel is expected to increase by more than U.S. consumption, raising stocks, lowering prices and increasing net exports, according to EIA’s April forecast.

The current STEO forecast was released April 11.
The previous STEO forecast was released March 7.

The full EIA short-term energy outlook can be found here. LL

Here’s this week’s retail diesel price survey.