The US Energy Information Administration (EIA) has forecast that oil prices for Brent crude, one of the most traded benchmarks, will climb above $80 per barrel (bbl) this month, following a drop to $73/bbl on 6 September.
In its September Short-Term Energy Outlook (STEO), the EIA predicts that the average Brent crude oil spot price will be $82/bbl in the fourth quarter of this year.
While the oil market is growing concerned about economic growth and oil demand, the EIA anticipates that OPEC+ production cuts will decrease global oil reserves as global oil consumption is expected to outstrip global oil production.
"We expect that oil prices will be pushed upward in the coming weeks and months as global oil consumption outpaces production," said EIA administrator Joe DeCarolis in a statement released on Wednesday. "There are uncertainties in the market, including demand growth in China and supply disruptions in the Middle East, that could push prices higher or lower in the short term."
The OPEC+ member countries announced last week their decision to delay increasing production until December, a move that was originally planned to start next month.
This decision was made in response to the recent drop in crude oil prices, which reached their lowest point in nine months. The drop was driven by concerns about negative economic data from China, the world's biggest oil importer, and a sluggish global economy.
Algeria, Iraq, Kazakhstan, Kuwait, Oman, Russia, Saudi Arabia and the UAE agreed to this extension. Leading up to the meeting, Iraq and Kazakhstan, which had exceeded their production quotas since January 2024, reaffirmed their commitment to the agreed-upon compensation schedules.
The EIA also anticipates Henry Hub's natural gas prices will remain relatively stable for 2024 before increasing in 2025. The hub is a distribution hub on the natural gas pipeline system in Louisiana.
The EIA projects that US natural gas production will reach nearly 105 billion cubic feet per day (bcf/d) in 2025, surpassing the previous domestic production record set in 2023.
According to the administration's forecast, prices are expected to rise. This is due to the expectation that US liquefied natural gas exports will exceed 2bcf/d by 2025, putting pressure on US natural gas storage levels.
For the upcoming heating season, the EIA expects the average retail propane price in the US to be $2.50 per gallon (gal), the same as last winter. Regional prices are anticipated to vary, with an average of approximately $3.35/gal on the East Coast and around $2.00/gal in the Midwest, resembling last winter's prices.
