Economic woes lead to a lower price outlook from the U.S. EIA

The U.S. Energy Information Administration cut its 2023 Brent crude oil forecast to $78.65 per barrel, well below the $85 average seen in April, in its May Short-Term Energy Outlook. OPEC+ block oil production is expected to decline by 300,000 barrels per day in 2023, mainly due to voluntary cuts.

Global demand for liquid fuels, driven by China and India, is expected to increase by 1.6 million barrels per day in 2023. The EIA expects the global oil market to return to equilibrium between the third quarter of 2023 and the first quarter of 2024, bringing the price of Brent crude back up from current levels to $75-80 per barrel.

Crude oil inventories to rise from mid-2024

However, the agency expects steady increases in crude oil inventories from the second quarter of 2024 onwards, with global production outstripping global demand, which will put pressure on crude oil prices. The EIA forecasts Brent crude to be at $74.47 per barrel in 2024 and WTI to be at $69.47 per barrel. Gasoline prices are expected to average $3.33/gal this year and $3.09/gal in 2024. Retail gasoline prices for the summer of 2023 are expected to be around $3.40/gal, 20 percent lower than the average for the summer of 2022. Gasoline price volatility is expected to be lower this summer than last year.