In the U.S. Energy Information Administration’s January Short-Term Energy Outlook, EIA forecasts that the Brent crude oil spot value will common $65 per barrel (b) in 2020 and $68/b in 2021 and that the West Texas Intermediate (WTI) spot value will common $59/b in 2020 and $62/b in 2021.

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EIA expects that crude oil costs will stay elevated within the first few months of 2020, reflecting a value premium on crude oil from current geopolitical occasions. However, this value premium will diminish within the first half of 2020, and market fundamentals will drive the crude oil value forecast within the second half of 2020 and in 2021.

Several geopolitical occasions have offered upward stress on crude oil costs in current months. These occasions embrace assaults on oil tankers transiting the Persian Gulf and the Red Sea, the September 2019 assault on Saudi Arabia’s vitality infrastructure, and up to date tensions between the United States and Iran. Monthly common Brent costs rose from $63/b in September to $67/b in December. Crude oil costs elevated throughout this era regardless of international liquid fuels inventories rising by 130,000 barrels per day (b/d).

Further growing the geopolitical danger premium on international oil costs, the U.S. navy motion in Iraq in January 2020 elevated uncertainty about potential disruptions to grease manufacturing and transport within the Middle East. Following these developments, the value of Brent crude oil reached $70/b, however costs have subsequently fallen.

As the danger premium decreases, EIA assumes that Brent costs will decline in early 2020 to a mean of $62/b in May. EIA doesn’t forecast provide disruptions, and any bodily provide disruptions would put upward stress on costs.

Source: www.worldoil.com

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