Crude oil prices are projected to remain relatively low throughout 2016 and 2017 according to the EIA’s short-term energy outlook.
The outlook forecasts that Brent crude oil prices will average $40 per barrel in 2016 and $50 per barrel in 2017. West Texas Intermediate crude prices are expected to be $2 per barrel lower than Brent in 2016 and $3 per barrel lower than Brent in 2017.
However, the EIA says that it recognizes there is still high uncertainty in the crude oil price outlook.
Prices are expected to remain low as supply continues to surpass demand in 2016 and as more crude oil is put into storage.
The report estimates that global oil inventories increased by 1.9 million barrels per day in 2015, marketing the second consecutive year of inventory builds.
Inventories are forecast to rise by an additional 0.7 million barrels per day in 2016, before the global oil market becomes more balanced in 2017.
The first forecasted draw on global oil inventories is anticipated to be in the third quarter of 2017, marking the end of 14 consecutive quarters of inventory builds.
In a twist, OPEC members are expected to account for more of the petroleum and liquids production growth, as opposed to the US, which has been largely responsible for the global increase since 2012.
Global consumption of petroleum and other liquid fuels is expected to surge by 1.4 million barrels per day in both 2016 and 2017.