The U.S. Energy Information Administration (EIA) on Tuesday lowered its 2022 price projections for WTI and Brent crude.
In its July Short-Term Energy Outlook report, the agency said the spot price of Brent crude oil, which averaged 71 U.S. dollars per barrel in 2021, will average 104 dollars per barrel in 2022, down 3.1 percent from the June forecast.
West Texas Intermediate (WTI) crude prices are expected to average 98.79 dollars per barrel, down 3.6 percent from the June projection.
In the monthly report, the agency also lowered its 2023 forecasts for WTI oil by 3.7 percent to 89.75 dollars and by 3.6 percent to 93.75 dollars for Brent.
Global oil inventories in the forecast rise by 0.8 million barrels per day (b/d) in 2022 and remain unchanged in 2023, according to the report.
The EIA also expects global consumption of liquid fuels will grow by 2.2 million b/d in 2022 and by 2.0 million b/d in 2023, while forecasting that OPEC crude oil production will rise by 2.4 million b/d to average 28.7 million b/d in 2022 and will further increase to 29.3 million b/d in 2023.
In comparison, crude oil production from OPEC members averaged 26.3 million b/d in 2021.
U.S. crude oil production is forecast to average 11.9 million b/d in 2022 and 12.8 million b/d in 2023, which would set a record for most U.S. crude oil production in a year. The current record is 12.3 million b/d set in 2019.
U.S. regular gasoline retail prices averaged 4.11 dollars per gallon in the first half of 2022, up from 2.78 dollars per gallon in the first half of 2021. The EIA forecasts that gasoline prices will average 4.05 dollars per gallon in 2022 and 3.57 dollars per gallon in 2023.
In the forecast, U.S. refineries will average 94 percent utilization in the third quarter of 2022, as a result of high wholesale product margins. However, it is not expected that U.S. refinery output of products will reach its highest level in the past five years.
Factors driving uncertainty about energy supply include how sanctions affect Russia’s oil production, the production decisions of OPEC+, and the rate at which U.S. oil and natural gas production rises, the report noted. ■