Production cuts, falling inventories a bad combination for oil market

September 13, 2023

SJ Munoz


An anticipated decline of nearly 500,000 barrels per day in global oil inventories has the Energy Information Administration forecasting higher oil prices through the end of 2023.

EIA’s expectation is based on production cuts from OPEC+ members as well as the extension of the production cut of 1 million barrels per day by Saudi Arabia.

“We expect crude oil prices to rise as global oil inventories decrease through the end of the year,” EIA Administrator Joe DeCarolis said. “High oil prices combined with uncertain economic conditions could lessen global demand for petroleum products through 2024.”

2021 2022 2023 2024
Brent crude oil
(dollars per barrel)
70.89 100.94 84.46 88.22
U.S. crude oil production
(million barrels per day)
11.27 11.91 12.78 13.16

The September short-term energy outlook forecasts the Brent crude oil price to average $93 per barrel in the fourth quarter of 2023. This in an increase from EIA’s $86 per barrel forecast in August.

By the second half of 2024, EIA expects this price per barrel to be $87.

EIA still expects the global production of liquid fuels to continue increasing in 2023 and 2024, thanks to production growth in non-OPEC+ countries.

In the U.S., consumption of liquid fuels will be lower in 2023 and 2024, said EIA’s forecast.

However, U.S. retail diesel prices are expected to continue to increase, as has been the trend for much of 2023. EIA is forecasting an average price per gallon of $4.31. That average is forecast to drop some 20 cents in 2024.

Notable Forecast Changes 2023 2024
Total U.S. liquid fuels consumption (current forecast) (million barrels per day) 20.1 20.3
Previous forecast 20.5 20.7
Percentage change -1.6% -2.2%
U.S. diesel retail price (current forecast) (dollars per gallon) $4.31 $4.07
Previous forecast $4.17 $3.94
Percentage change 3.5% 3.4%

The current STEO forecast was released Sept. 12.
The previous STEO forecast was released Aug. 8.

EIA’s full report is available here. LL

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