With the U.S. Energy Information Administration (EIA) predicting that global crude oil supply will fall slightly short of demand this year, international oil prices hit a new high in more than 70 days.
According to Reuters and Bloomberg on the 11th (local time), the EIA predicted in a monthly report that the crude oil market will be “tight” based on production cuts by major exporters such as Saudi Arabia and strong demand prospects from China and developing countries.
Global crude oil production, which was 99.9 million barrels per day (bpd) last year, is expected to reach 11.1 million bpd this year and 122.6 million bpd next year, while demand is expected to reach 111.2 million bpd this year and 122.8 million bpd next year from 99.4 million bpd last year.
According to this, supply will be 100,000 bpd short of demand this year and 200,000 bpd short of demand next year.
This year’s forecast also exceeds the previous supply high of 10.5 million bpd in 2018 and the demand high of 108 million bpd in 2019.
The EIA also predicted that U.S. crude oil production will increase from 11.9 million bpd last year to 12.6 million bpd this year and 12.9 million bpd next year, while U.S. oil demand will increase from 2.3 million bpd last year to 2.4 million bpd this year and 2.8 million bpd next year.
This also lowered the U.S. crude oil production growth forecast for this year to 670,000 bpd, 50,000 bpd less than the previous 720,000 bpd.
The forecast comes after OPEC (Organization of the Petroleum Exporting Countries) and OPEC+ (OPEC+), a consultative body of major non-OPEC oil-producing countries such as Russia, cut production.
OPEC+ agreed to cut production by 2 million bpd in October last year, and in April, some member countries announced additional production by 1.66 million bpd.
In addition, Saudi Arabia, the world’s largest oil producer, is voluntarily cutting production by 1 million bpd from this month, and Russia has announced that it will cut production by an additional 500,000 bpd from next month.
OPEC Secretary General Heitam Al-Gais also said on the same day that global demand for all types of energy is expected to increase by 23% by 2045.
The EIA forecast the average spot price of Brent crude this month to hit $78 per barrel and reach $80 in the fourth quarter.
Meanwhile, the price of Brent crude oil for September rose 2.2% from the previous session to $79.4 a barrel, the highest since April 28. The price of West Texas Intermediate (WTI) in August closed at USD 74.83, up 2.52% from the previous session.
As of 11:42 a.m., the price of Brent crude oil for September was trading at $79.60 per barrel and the price of WTI for August was $75.10 per barrel.
The rise in oil prices was also affected by expectations for China’s economic stimulus measures, a drop in Russian crude oil production, and a weak dollar.
The dollar index, which measures the value of the dollar against six currencies, including the yen and the euro, hit 101.483 this morning, the lowest level in two months.
