EIA Sharply Cuts Oil Price Forecast

The EIA has revised downward again its oil price forecast in October’s Short Term Energy Outlook (STEO), shaving another $5 per barrel off its forecast compared to last month’s STEO. The reason for the downward adjustment to oil predictions, which it now expects will be fall to $57 per barrel by the second quarter of 2020, is due to the rise of global oil inventories during the first half of 2020. Brent spot prices averaged $63 per barrel in September. While the EIA acknowledges the greater risk of oil supply disruptions as of late, it remarks that this risk is more than offset by “increasing uncertainty about economic and oil demand growth in the coming quarters.” The EIA estimates that crude oil production from OPEC averaged 28.2 million bpd in September, which is down 1.6 million bpd from August. US production was also down for the last month for which there is data: 11.8 million bpd for July, which is 0.3 million bpd down from June production...MORE