Washington — Higher oil production from OPEC and Russia in July will likely push Brent prices toward $70/b by the end of the year as the market appears to be fairly balanced in the coming months, the US Energy Information Administration said Tuesday.
EIA sees Brent prices averaging $71.74/b in 2018 and $70.58/b in 2019. It expects WTI prices to average $66.21/b in 2018 and $64.34/b in 2019.
"Even though EIA sees oil prices continuing to moderate in the coming months, global oil inventories are below five-year average levels and OPEC spare capacity is low, which could contribute to price volatility and possible price increases if supply disruptions occur," EIA Administrator Linda Capuano said in a statement.
EIA trimmed its outlook for US crude production to 10.68 million b/d in 2018 and 11.7 million b/d in 2019, down 110,000 b/d and 100,000 b/d from last month's outlook, respectively.
"We're expecting production to rise by about 1 million b/d in the coming year, with production almost reaching 12 million b/d by the end of next year," Capuano said.
EIA said US gasoline prices likely peaked in May, if crude prices continue to fall or remain flat in the coming months.
OPEC members increased production to 32.51 million b/d in July, from 32.25 million b/d in June, EIA said. But EIA expects OPEC output to fall each month until December, when it sees production at 31.9 million b/d.
All OPEC members, except for Iran, Venezuela and Gabon , increased production in July. Saudi Arabia boosted production to 10.6 million b/d in July from 10.47 million b/d in June, EIA estimated.
Iran output fell 40,000 b/d from June to 3.74 million b/d in July, EIA said. US sanctions against Tehran resume in early November and could block up to 1 million b/d in Iranian exports.
Venezuelan oil production fell 20,000 b/d from June to 1.34 million b/d in July, EIA said. The figure could plunge to 1 million b/d by the end of the year and drop to 600,000 b/d by the end of next year, EIA analyst Lejla Villar told S&P Global Platts.
