EIA forecasts lower crude oil prices, but expected inventory declines present considerable uncertainty (6/12/2019)

In the June 2019 Short-Term Energy Outlook (STEO), the U.S. Energy Information Administration (EIA) forecasts that Brent crude oil prices will average $67 per barrel (b) in 2019 and in 2020. EIA expects that West Texas Intermediate (WTI) crude oil prices will average $59/b in 2019 and $63/b in 2020. In the June STEO, EIA forecasts Brent and WTI prices in 2019 will be $3/b and $4/b lower, respectively, than forecast in the May 2019 STEO, and the 2020 crude oil price forecasts are unchanged. The lower 2019 price forecasts reflect recent price declines in global crude oil prices, which lowered the starting point for EIA’s forecast. However, the forecast is highly uncertain, however, as reflected in high implied volatility for crude oil options, which EIA uses to inform a market-derived confidence interval of price ranges (Figure 1). Recent data for a variety of oil market indicators—macroeconomic and global oil demand growth, liquid fuels stock levels, refinery runs, production from members of the Organization of the Petroleum Exporting Countries (OPEC), and the effect of tariffs—point to continued price uncertainty. ... More »