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Brent Crude Oil Prices to Rise through April

The U.S. Energy Information Administration (EIA) expects Brent Crude Oil prices to average $64 per barrel in its March Short-term Energy Outlook (STEO). They hope that the price will again fall at the end of 2022 to $60 per barrel. In March and April, the prices of Crude oil are expected to be higher. Primarily, this would result from lower crude production from members of the Organization of the Petroleum Exporting Countries (OPEC) and partner countries (OPEC+).

In February 2021, the OPEC+ cuts and supply disruptions in the United States contributed to the monthly global petroleum inventory withdrawals. The EIA estimates totaled 3.7 million b/d which was the most extensive monthly drawing since December 2002. In early March, the Brent Crude Oil price averaged $63 per barrel leading up to the OPEC+ meeting. The OPEC+ announcement put further pressure on the crude oil prices, making them rise.

The front-month Brent futures price surpassed $70 per barrel briefly in the intraday trading in the days following the announcement. On March 7th, the Ras Tanura oil facilities attack in Saudi Arabia and the announcement both fuelled the price hikes. The extension of OPEC+ cuts resulted in EIA expecting to draw on global petroleum and other liquid inventories of 1.8 million b/d and 0.6 million b/d in the first and second quarters of 2021.

The OPEC+ production curtailment through April shows that supply will remain constrained in the coming months as well. Hence, EIA expects that meeting the rising crude oil demand will need further inventory withdrawals elevating April’s prices.

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