Energy Preview: EIA Expects Brent Prices To Average $116 Per Barrel In Second Quarter Of 2022

10 Mar 2022 , 08:50 AM

The US EIA stated in a latest monthly update that Brent crude oil spot prices averaged $97 per barrel (b) in February, an $11/b increase from January. Daily spot prices for Brent closed at almost $124/b in the first week of March as the further invasion of Ukraine by Russia and subsequent sanctions on Russia and other actions created significant market uncertainties about the potential for oil supply disruptions. These events are occurring against a backdrop of low oil inventories and persistent upward oil price pressures. Global oil inventories have fallen steadily since mid-2020, and inventory draws averaged 1.8 million barrels per day (b/d) from the third quarter of 2020 (3Q20) through the end of 2021. EIA estimates that oil inventories fell further in the first two months of 2022 and that commercial inventories in the OECD ended February at 2.64 billion barrels, which is the lowest level since mid-2014.

EIA expects the Brent price will average $117/b in March, $116/b in 2Q22, and $102/b in the second half of 2022 (2H22). The average price is expected to fall to $89/b in 2023. However, this price forecast is highly uncertain. Actual price outcomes will be dependent on the degree to which existing sanctions imposed on Russia, any potential future sanctions, and independent corporate actions affect Russia’s oil production or the sale of Russia’s oil in the global market.

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