EIA Lowers 2024 Oil, Gas, and Diesel Price Forecasts

The U.S. Energy Information Administration (EIA) has revised its 2024 price forecasts for crude oil and refined products, reflecting changes in market dynamics. Despite acknowledging the recent OPEC+ agreement to cut production, the EIA has become less optimistic regarding price increases in the coming months.

According to the EIA’s latest projections, the U.S. benchmark West Texas Intermediate (WTI)  is expected to average $78.80 per barrel in the first quarter of 2024, with an annual average of $78.07 per barrel for the entire year. These figures represent a 12.1% and 12.5% decrease, respectively, compared to November’s forecasts. Similarly, the European benchmark Brent crude is anticipated to average $83.30 per barrel in Q1/2024 and $82.57 per barrel for the year, marking a 12.1% and 12.6% decrease from the previous month’s predictions.

While these forecasts are lower than before, it’s worth noting that the EIA’s projections for Brent prices at the beginning of the year are still approximately $10 per barrel higher than the current market price. This expected increase is attributed, in part, to the 2.2 million barrels per day (b/d) production cut agreed upon by OPEC and its allies last month. Currently, both WTI and Brent prices are hovering around $10 per barrel below the EIA’s Q1 price forecasts.

Gasoline and Diesel Price and Consumption

The EIA has also made downward revisions to its forecasts for gasoline and diesel prices in the coming months, albeit not as substantial as the adjustments for crude oil. The agency expects U.S. gasoline prices to average $3.18 per gallon in the upcoming quarter and $3.36 per gallon for the entire year, reflecting decreases of 6.9% and 6.8% from the previous month’s predictions. In contrast, diesel prices are projected to average $3.99 per gallon in Q1, marking an 8.9% reduction, and $3.95 per gallon for the year, down 7.1%.

Despite the OPEC+ decision to limit production, the EIA forecasts total world production of oil and liquid fuels to average 102.19 million b/d in 2024. This represents an increase of over 400,000 b/d from the 2023 average but is 0.3% lower than the total production forecasted last month. The EIA has also revised its projection for U.S. crude oil production in 2024, anticipating an average output of 13.11 million b/d.

In terms of consumption, the EIA has slightly lowered its global consumption forecast for oil and liquid fuels to an average of 102.34 million b/d, reflecting a 0.1% decrease from last month’s estimate. Nevertheless, this figure still remains slightly above the forecast for global output. Within the United States, the agency expects consumption of petroleum and liquid fuels to average 20.39 million b/d, marking a 0.2% increase from the previous month’s forecast.