What Does the EIA Forecast for WTI and Brent Crude Oil Prices?



WTI and Brent crude oil price averages in November

In its STEO (Short-Term Energy Outlook) released yesterday, the EIA (U.S. Energy Information Administration) stated that Brent crude oil prices fell $4 in November in comparison with October’s average. In November, Brent oil prices averaged $44 per barrel. WTI (West Texas Intermediate) crude oil prices also fell $4 per barrel to average $42 per barrel in November.

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WTI and Brent crude oil price forecasts

The EIA estimates that WTI crude oil prices will average $49 per barrel in 2015 and $51 per barrel in 2016. For Brent oil, the EIA expects prices to average $53 per barrel in 2015 and $56 per barrel in 2016.

Why crude oil prices fell last month

Long-term lower crude oil prices are due to oversupply in the market. The crude oil market is oversupplied due to OPEC and non-OPEC crude suppliers’ fear that they could lose market share. This has resulted in price wars between oil-exporting countries and a fall in crude oil prices. The continuing oversupply has kept crude oil prices low for a long time.

In the last month, WTI prices have fallen more than 5% due to less demand for refined products. Most of the refineries are still offline due to planned and unplanned winter maintenance, which has decreased refinery inputs. Geopolitical concerns about crude oil supply and consumption stemming from the terrorist attacks in Paris and the Russian aircraft shot down by Turkey have led to a fall of crude oil prices in the last month.

What is the impact on US oil producers?

Lower oil prices hurt the revenues of crude oil producers such as ExxonMobil (XOM), Chevron Corporation (CVX), Concho Resources (CXO), and Anadarko Petroleum Corporation (APC). CVX, APC, and XOM make up ~5% of the iShares Global Energy ETF (IXC).

For more updates on crude oil production and consumption, continue to the next part of this series.


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