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EIA Revises Oil Price Forecasts for 2023

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The US Energy Information Administration (EIA) lowered its Brent spot average price forecast for 2022 and 2023 in its latest short term energy outlook (STEO) report.

In its October STEO, the EIA projects that the average Brent spot price will be $102.09 per barrel this year and $94.58 per barrel in 2023. Broken down quarterly, the latest EIA STEO forecasts that the Brent spot average will hit $92.98 per barrel in the fourth quarter of 2022, $93.30 per barrel in the first quarter of 2023, $93.35 per barrel in 2Q 2023, $95 per barrel in 3Q 2023, and $96.65 per barrel in 4Q 2023.

In its previous September STEO, the EIA projected that the Brent spot average price would hit $104.21 per barrel in 2022 and $96.91 per barrel in 2023. In that STEO, the EIA expected the Brent spot average to come in at $97.98 per barrel in 4Q 2022, $98.67 per barrel in 1Q 2023, $97.65 per barrel in 2Q 2023, $96.32 per barrel in 3Q 2023, and $95 per barrel in 4Q 2023.

The EIA noted in its latest STEO that, prior to the OPEC+ announcement and the speculation of cuts in the days immediately preceding the announcement, crude oil prices were generally decreasing due to increasing concerns around weakening global economic conditions.

The EIA, in the October STEO, said: “In addition, the 180-million-barrel Strategic Petroleum Reserve release conducted in recent months may also have relieved supply concerns.

“The front-month futures price for Brent crude oil averaged $7 per barrel lower in September than in August. September marked the third consecutive month in which the Brent crude oil futures price decreased, bringing the total decrease to $27 per barrel in those three months.”

The price of Brent crude oil dropped from over $123 per barrel in June to just over $84 per barrel around the end of September, before rising back up to almost $98 per barrel on October 7 then dropping again to the low $90’s. Brent’s 2022 peak, so far, was seen on March 8 at 127.98 per barrel, and its 2022 low, so far, was seen on January 3 at $78.98 per barrel.

Currently, Brent is trading at $93.90 per barrel.

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