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EIA Downgrades US Crude Oil Price Forecast for 2017

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Nov. 20 2020, Updated 5:32 p.m. ET

Supply and demand gap 

Lower crude oil prices tend to narrow the supply and demand imbalance. On the other hand, high crude oil, gasoline, and distillate inventories, as well as easing supply outages pressure crude oil prices. Read Crude Oil Market: Is the Supply and Demand Imbalance Narrowing? for more on the supply and demand imbalance.

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Crude oil price forecasts 

The EIA (U.S. Energy Information Administration) released its monthly Short-Term Energy Outlook (or STEO) report on September 7, 2016. It estimates that US crude oil prices will average $41.92 per barrel in 2016 and $50.58 per barrel in 2017. It estimated that Brent crude oil prices will average $42.54 per barrel in 2016 and $51.58 per barrel in 2017.

In its August STEO report, the EIA had estimated that US crude oil prices would average $41.16 per barrel in 2016 and $51.58 per barrel in 2017. It had also estimated that Brent crude oil prices would average $41.60 per barrel in 2016 and $51.58 per barrel in 2017.

The EIA downgraded US crude oil price forecasts by $1 per barrel in 2017 in its September STEO report compared to its estimates in its August STEO report. The EIA expects the decline in global crude oil inventories in 2H16 will push crude oil prices higher.

High crude oil prices have a positive impact on the margins of producers such as Goodrich Petroleum (GDP), Carrizo Oil & Gas (CRZO), and Whiting Petroleum (WLL).

High prices also impact ETFs and ETNs like the VelocityShares 3X Inverse Crude Oil ETN (DWTI), the ProShares UltraShort Bloomberg Crude Oil ETF (SCO), the Fidelity MSCI Energy (FENY), the Guggenheim S&P 500 Equal Weight Energy ETF (RYE), the ProShares Ultra Oil & Gas (DIG), and the Vanguard Energy ETF (VDE).

For more on crude oil prices, read Saudi Arabia: Weather Will Be a Key Demand Driver of Oil in 2H16. For information on crude oil price forecasts, read Will Crude Oil Prices Test 3 Digits Again?

For ongoing analysis, visit Market Realist’s Upstream Oil and Gas page.

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