Crude oil price forecasts for 2015 and 2016
In its April STEO (“Short-Term Energy Outlook”), released on April 7, the EIA estimates that WTI crude oil will average $52 per barrel in 2015 and $70 per barrel in 2016. For Brent, the EIA expects prices to average $59 per barrel in 2015 and $75 per barrel in 2016. These estimates remain unchanged from last month’s STEO.
Lower crude oil prices hurt the margins of oil companies such as Marathon Oil (MRO), Murphy Oil (MUR), Hess (HES), and ConocoPhillips (COP). All these companies are components of the Energy Select Sector SPDR ETF (XLE). They make up ~7.2% of the ETF.
The STEO noted, “This price projection remains subject to the uncertainties surrounding the possible lifting of sanctions against Iran and other market events.”
Monthly average Brent prices
After crude oil prices increased by $10 in February, the EIA stated that Brent prices fell by $2 per barrel compared to February, averaging $56 per barrel in March.
The increase in the monthly average in February was a result of falling US rigs and capex reductions announced by oil and gas companies. However, as per the STEO, “This upward price pressure abated in March, as the combination of robust world crude oil supply growth and weak global demand contributed to an increase in the rate of global inventory builds.”
We’ll look at global consumption and production trends in the following part of this series.
Monthly Average WTI Prices
WTI (West Texas Intermediate) prices also decreased by $3 per barrel from $51 per barrel in February to $48 per barrel in March. The STEO noted, “WTI prices fell in March in large part because of commercial crude oil inventories in Cushing, Oklahoma, which increased to a record 58.9 million barrels as of March 27.”
Cushing inventories have surpassed March 27 levels, as reported by the EIA’s recent release, for the week ended April 3. Read EIA Reports Bearish Crude Inventory Data Last Week – What Does It Mean? to learn more
In the next part of this series, we’ll discuss the EIA’s global oil supply projections.