Renta 4| The US Energy Information Administration revises its supply and demand and crude oil price estimates for 2024.
In its March edition of the Short-Term Energy Outlook, the US Energy Information Administration (EIA) said it expects Brent crude oil prices to average 88 usd/b in the second quarter of 2024, up 4 usd/b from February, estimating Brent crude oil prices to average 87 usd/b in 2024, up from 82.4 usd/b in February.
The increase in the oil price forecast reflects the extension of the OPEC+ production cuts, officially announced on 4 March and, for the time being, until the second quarter of 2024, and estimating that they will be maintained until the end of the year. Thus, the EIA forecasts an increase in global liquid fuels production of 400,000 b/d in 2024, down from the 600,000 b/d growth forecast last month and significantly lower than the 1.8 million b/d increase seen in 2023.
Similarly, the EIA forecasts global crude oil demand to rise by 1.3 mln b/d in 2024, an increase of 110,000 b/d, mainly due to higher demand growth from the US, as well as the impact of instability in the Red Sea. Thus, the EIA now forecasts global crude oil demand to average 103.2 mln b/d in 2024, while the agency’s 2025 demand growth forecast has increased by nearly 50% since its outlook was first presented in the summer of last year, despite which the EIA remains well below OPEC’s demand forecast, which expects crude oil demand growth to add at least 2.2 mln b/d to current demand through 2024.
Thus, the EIA now expects global oil inventories to fall by 900,000 b/d in the second quarter of 2024; last month, the EIA had forecast inventories to remain relatively unchanged in the second quarter.
According to the EIA, despite the constraints imposed by OPEC+ production cuts on global growth by 2024, non-OPEC+ production is expected to increase by 1.5 million b/d, driven mainly by the United States, Guyana, Brazil and Canada. This expansion offsets the decline in crude oil production subject to the OPEC+ agreement, which is projected to fall by 1.1 mln b/d in 2024. The global liquid fuels production forecast indicates an increase of 2 mln b/d in 2025, of which 900,000 b/d will come from OPEC+ countries and 1.1 mln b/d Non-OPEC+.
Assessment: Positive news confirming the favourable environment for the oil company, raising price estimates above the Company’s forecast of 80 usd/b by 2024, coupled with tight refining margins during 1Q24, which should help offset the weakness in gas prices (2.09 usd/MMbtu versus 3 usd/MMbtu estimate).
