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+).
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.