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Price of oil predicted to rise moderately in the next two years

The energy sector is abuzz with the latest forecast from the U.S. Energy Information Administration (EIA), which projects a steady rise in crude oil prices through 2024 and 2025. 


Stable prices ahead:

According to the EIA, the annual average price of crude oil is expected to hover around the 2023 average for the next two years. Brent crude oil is forecast to average at $82 per barrel in 2024 and $79 per barrel in 2025, aligning closely with its 2023 average. Similarly, West Texas Intermediate (WTI) prices will slightly trail behind but follow a similar trend.


Key drivers:

This moderate rise in prices can be attributed to a balanced global supply and demand for petroleum liquids. The first quarter of 2024 may see a slight spike in prices due to OPEC+ production cuts, which are estimated to reduce global inventories by 810,000 barrels per day. However, post-April 2024, a gradual price decline is expected as global production incrementally surpasses consumption.


OPEC+ influence:

The EIA attributes these price changes to OPEC+ production adjustments. Predictions indicate a drop in OPEC+ crude oil production from 37.1 million barrels per day in 2023 to 36.4 million in 2024, followed by a slight increase in 2025. Notably, Angola's departure from OPEC in January 2024 is excluded from these figures.


The OPEC+ deal:

OPEC+ recently announced a deal involving 2.2 million barrels per day of new voluntary cuts through March 2024. These cuts are in addition to those agreed upon in June 2023. It's expected that OPEC+ will produce below its set targets in 2024.


Non-OPEC+ production:

Countries not affiliated with OPEC agreements produced approximately 52.0 million barrels per day in 2023. This figure is expected to rise to 53.0 million barrels per day in 2024 and 53.9 million in 2025, with the U.S. leading this growth.


Global consumption trends:

The past two years have seen a surge in global oil consumption, driven largely by economic growth and a return to pre-pandemic travel patterns. However, the consumption increase forecast for 2024 and 2025 is slightly below the pre-pandemic 10-year average.


US production outlook:

The U.S. is set to achieve record crude oil production levels over the next two years, albeit at a slower growth rate. This increase in U.S. production, coupled with OPEC+ production cuts, is a strategic move to bolster oil prices.


The forecasted moderate increase in oil prices reflects a complex interplay of global supply, demand, and strategic production decisions. As we move into 2024 and 2025, these factors will continue to shape the landscape of the oil and gas industry.



Price of oil predicted to rise moderately in the next two years
Price of oil predicted to rise moderately in the next two years

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