In its February Short-Term Energy Outlook (STEO), the US Energy Information Administration forecast Brent crude prices to average $37.52/bbl in 2016, compared with a previous forecast of $40.15/bbl. West Texas Intermediate prices are expected to average $37.59/bbl, down from $38.54/bbl forecasted last month. For 2017, EIA raised its outlook for WTI to $50/bbl from $47/bbl, while leaving the Brent forecast at $50/bbl.
In the report, EIA forecast global oil inventories to increase by annual average of 1 million b/d in 2016 and by an additional 300,000 b/d in 2017, both higher than previous forecasts.
EIA estimates global consumption of petroleum and other liquid fuels increased 1.4 million b/d in 2015, averaging 93.8 million b/d for the year. EIA expects global consumption to rise 1.2 million b/d in 2016 and 1.5 million b/d in 2017, compared with forecasts of 1.4 million b/d for both years in last month’s STEO.
Non-OPEC production
EIA expects production outside of the Organization of Petroleum Exporting Countries to decline 600,000 b/d in 2016, which would be the first decline since 2008. Most of the forecast production decline in 2016 is expected to be in the US, due to high decline rates and relatively short investment horizons. Non-OPEC production is forecast to decline 200,000 b/d in 2017.
“Forecast total US liquid fuels production declines by 500,000 b/d in 2016, as low oil prices contribute to drilling rig counts falling below levels required to sustain current production. In 2017, US liquid fuels production is relatively flat,” EIA said.