North Sea Brent and West Texas Intermediate crude prices are set to increase during 2017 and 2018.
According to the Energy Information Administration’s Short-Term Energy Outlook, Brent and WTI crude prices will average $53 per barrel and $52 per barrel respectively in 2017. These prices are expected to rise to $56 per barrel and $55 per barrel respectively in 2018.
Recently, a series of factors have put upward pressure on crude prices such as strong demand and the recent OPEC agreement to implement a production cap.
However, forecast increases in global production will put downward pressure on prices and effectively mitigate the potential for significant price increases through 2018.
The EIA expects global petroleum and other liquid inventory builds to continue, but at a slowing rate in 2017 and 2018.
Brent crude oil spot prices are expected to remain fairly flat over 2017 partly as a result of the responsiveness of US tight oil production to rising oil prices in late 2016.
The EIA forecasts Brent prices will slowly increase in 2018, ending at $59 per barrel in December. It says that between January and December 2018, inventory builds will slow, putting modest upward pressure on prices. This oil price rise encourages production increases, particularly in the Lower 48 onshore.
Total US crude oil production is estimated to have averaged 8.9 million barrels per day in 2016, down 500,000 barrels per day from 2015. It is forecast that US production will increase to an average of nine million barrels per day in 2017 and 9.3 million barrels per day in 2018.
The EIA estimates that global petroleum and other liquids production will increase through the forecast period.