KUALA LUMPUR (June 10): Brent Crude prices are expected to average US$68 per barrel (pb) in the third quarter this year (3Q21), said the US Energy Information Administration (EIA).

In its latest monthly short-term energy outlook (STEO), the forecast was higher by as much as US$5 per barrel from the previous projection.

The EIA said that after declining in April, crude oil prices in May moved towards post-pandemic daily highs at nearly US$70pb.

It said continuing draws on global oil inventories contributed to upward crude oil price pressures.

“Despite rising Covid-19 case counts in some countries, particularly India, global oil demand remained higher than supply in May, contributing to continued global withdrawals from inventories of crude oil and petroleum products.

“However, we estimate withdrawals fell to 1.2 million barrels per day (b/d) in May, compared with average monthly withdrawals of 2.1 million b/d since June 2020,” it said.

In the June STEO, the EIA raised its Brent price forecasts for the coming months.

“We now expect Brent prices to average US$69pb in June and US$68pb in 3Q21, which are US$4pb and US$5pb higher respectively, than in last month’s forecasts.

“The price forecasts keep prices near or slightly below current levels through 3Q21, and incorporate recent price increases and our forecasts of mostly balanced oil markets in the coming months,” it said.

The EIA said given the announced increases in OPEC crude oil production, it expects production to increase more rapidly in the second half of 2021 (2H21) to keep pace with rising demand.

In its forecast, global oil consumption will rise by 2.8 million b/d from 2Q21 to 2H21, while global oil production will rise by 4.3 million b/d during the same period, balancing out the 1.5 million b/d of global oil inventory drawn from 2Q21.

“We expect more significant downward oil price pressures to emerge later in 2021 and into 2022 as forecast global oil supply outpaces slowing oil demand growth,” it said.