The price of Brent crude oil should rebound in the next year to about $76 a barrel as consumption continues to increase in coming years, a key US energy agency said.
The US Energy Information Administration anticipates increased growth in fuel consumption, largely through growth in emerging economies in Asia, the Middle East and Africa, it said in an international outlook for the energy market.
This is the first EIA International Energy Outlook report since September 2014.
The EIA said that due to the glut of supply, it expects the spread between US crude and Brent to remain between $0 and $10 a barrel.
The EIA said it expects liquids production to grow by 30.5 million barrels/day by 2040.
It said world GDP growth should average 3.3 percent in the next 25 years, largely due to stronger economic growth in emerging nations.
Oil prices surrendered most of their early gains on Wednesday, with US crude turning negative.
Brent and US crude’s West Texas Intermediate (WTI) futures rose earlier as Shell announced a Nigerian pipeline closure while Canadian energy firms tried to restart closed facilities that had halted more than 1 million barrels per day (bpd) in supply after a huge wildfire in Alberta’s oil sands region.
In the previous session, Brent settled up 4 percent and WTI more than 2 percent on expectations that record US crude inventories would not swell as much as they have in recent weeks.
That was before preliminary data from the American Petroleum Institute (API), an industry group, suggesting US crude inventories rose by 3.45 million barrels to a record high of 543.1 million during the week ended May 6. Analysts polled by Reuters had expected a build of only 714,000-barrels.
“Crude needs to start drawing soon or this market is in trouble,” said Scott Shelton, broker with ICAP in Durham, North Carolina.
He cited reduced supply out of Canada, which exports an estimated 3.5 million bpd of oil sands output to the US, should be a driving force for reducing US stockpiles.
“I would think that the draws are coming and the market is going to be willing to wait for it.”
Another broker concurred, noting that Canada’s oil sands production “looks to come back gradually as wild fires become controlled.”
Brent was up 17 cents at $45.69 per barrel by 1345 GMT. It had risen 61 cents at the session high.
WTI fell 25 cents to $44.41. It climbed as much 31 cents earlier.
News of production declines and disruptions in North America, Latin America, Asia, and elsewhere in Africa had supported crude prices this week.
Royal Dutch Shell’s Nigerian unit, Shell Petroleum Development Co. (SPDC), said on Tuesday it had declared force majeure on Bonny Light exports following the closure of the Nembe Creek Trunk line (NCTL) for repairs after a leak.
EIA sees Brent oil prices rebounding to $76 in 2017
EIA sees Brent oil prices rebounding to $76 in 2017
