Brent crude oil spot prices averaged $64/bbl in February, up $5/bbl from January and about $1/bbl lower than the same time last year.
Declining estimated crude oil production for February from both the Organization of Petroleum Exporting Countries and the US contributed to a drawdown of 1.4 million b/d in global liquid fuels inventories, according to the latest Short-Term Energy Outlook from the US Energy Information Administration.
Notwithstanding the strong draw in February, EIA forecasts that global liquid fuels inventories will rise by 200,000 b/d in 2019 and by 400,000 b/d in 2020. The March STEO’s expected inventory builds in both years are lower than those forecast in last month’s STEO, reflecting lower expected crude oil production from OPEC and the US.
Saudi Arabia cut crude oil production by more than expected in February, with production averaging 10 million b/d of oil. EIA assumes that joint OPEC and non-OPEC crude oil production cuts will remain in place through yearend.
US crude oil production averaged 11.9 million b/d in February, down slightly from the January average, according to EIA estimates. EIA forecasts that US crude oil production will average 12.3 million b/d in 2019 and 13 million b/d in 2020, with most of the growth coming from the Permian basin.
“OPEC and US production levels, as well as the pace of global oil demand growth, present considerable uncertainty to oil market balances and price expectations. Based on the current forecast, however, EIA expects global inventory builds and rising OPEC spare capacity will limit significant upward oil price pressures in 2019 and in 2020,” EIA said.
By OGJ editors