The US Energy Information Administration on Tuesday sharply lowered its oil price outlook for early next year, as it sees increasing uncertainty about economic and oil demand growth more than offsetting the higher risks of supply disruptions after the Saudi oil facility attack.
EIA cut its Brent outlook by $5.31/b for the second quarter of 2020 to $56.69/b. It sees Brent averaging $59.36/b in Q4 2019 and $58/b in Q1 2020, down 97 cents/b and $4/b, respectively, from last month's outlook.
"Despite the recent increase in supply disruptions, EIA expects downward oil price pressure to emerge in the coming months as global oil inventories rise during the first half of 2020," EIA said in its Short-Term Energy Outlook for October.
EIA now expects Brent to average $63.37/b in 2019, down 2 cents/b from last month's outlook, and average $59.93/b in 2020, down $2.07/b from last month's outlook.
WTI is expected to average $53.86/b in Q4 2019, $52.50/b in Q1 2020 and $51.19/b in Q2 2020, down 97 cents/b, $4/b and $5.31/b, respectively, from last month's outlook.
EIA now sees WTI averaging $56.26/b in 2019 and $54.43/b in 2020.
US oil production is expected to average 12.26 million b/d in 2019, up 20,000 b/d from last month's outlook, and 13.17 million b/d in 2020, down 60,000 b/d from the last outlook.
EIA said US oil output growth would pick up in the fourth quarter on an uptick in the Gulf of Mexico and as Permian pipelines start carrying more barrels to the Texas Gulf Coast.
This follows relatively flat output for the first seven months of the year because of disruptions to Gulf of Mexico drilling platforms and slowing growth in tight oil plays, EIA said.
Looking into 2020, EIA forecasts US oil production growth will level off because of falling crude prices in the first half of the year and continuing declines in well productivity.
