The Energy Information Energy of the DOE sees oil supply/demand pretty much in balance over the next two years, but not drawing stock levels…
From yesterday’s Short Term Energy Outlook by the EIA:
“EIA estimates that global petroleum and other liquid fuels inventory builds averaged 0.9 million b/d in 2016. The annual average inventory build in 2016 marked the third consecutive year of inventory builds. The pace of inventory builds is expected to slow considerably to an annual average of 0.3 million b/d in 2017 and 0.1 million b/d in 2018. However, inventories are forecast to draw by an average of 0.1 million b/d in the second half of 2018.”
The EIA’s forecast assumes OPEC mostly adheres to the agreement. Here is their chart showing supply/demand balance and inventory change:
This leads the EIA to a price forecast:
“Brent crude oil prices are forecast to average $53/b in 2017 and $56/b in 2018. West Texas Intermediate (WTI) crude oil prices are forecast to average $1/b less than Brent in both 2017 and 2018.” (which is around where we are now)…
The price forecast comes with a caveat:
“The current values of futures and options contracts suggest high uncertainty in the price outlook. For example, EIA’s forecast for the average WTI price in December 2017 of $53/b should be considered in the context of NYMEX contract values for December 2017 delivery. Contracts traded during the five-day period ending January 5 suggest the market expects WTI prices could range from $35/b to $93/b (at the 95% confidence interval) in December 2017.”
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