EIA forecast oil prices to decline beginning 2023’s second half

In their January 2023 Short-Term Energy Outlook, the official website of the governmental US Energy Information Administration (EIA), forecasts Brent crude oil price to rise from an average $81 per barrel recorded in December 2022 to average $83/b in the first quarter of 2023 (1Q23).

The EIA also expects this forecast increase to follow the upcoming EU ban on seaborne imports of petroleum products from Russia, effective February 5.

This mentioned ban will likely be more disruptive to the global petroleum markets than the EU’s December 2022 ban on seaborne crude oil imports from Russia. Brent price is expected to stay relatively flat through 2Q23, averaging $85/b, and then decline through the end of 2024.

The report expects Brent price will average $83/b in 2023 and $78/b in 2024, down from $101/b in 2022. The West Texas Intermediate (WTI) price (the US benchmark price) is forecast to generally follow a similar path, averaging $77/b in 2023 and $72/b 2024.

Implied builds in global petroleum inventories are driving these declines in crude oil prices. EIA forecast global petroleum inventory builds will average more than 0.6 million b/d in 2023–24.