Brent crude oil prices are expected to be an average of $51 per barrel in 2017 and $52 per barrel in 2018, according to the U.S. Energy Information Administration. West Texas Intermediate crude oil prices should be about $2 per barrel less than Brent prices in 2017 and 2018.
In late June, crude oil prices fell to their lowest level so far this year. The price declined after the EIA reported U.S. crude oil and petroleum inventories had risen above their five-year average in early June. Increased production in Libya and Nigeria in June also pushed down prices.
U.S. crude oil production is expected to rise 500,000 barrels per day to 9.3 million barrels per day in 2017, from 2016, according to the EIA. Production is expected to rise 600,000 barrels per day to 9.9 million barrels per day in 2018.
Crude oil production for the Organization of the Petroleum Exporting Countries (OPEC) is expected to decline by 200,000 barrels per day in 2017. OPEC countries agreed to limit production in November 2016, but how long the agreement will remain in effect is uncertain. The EIA expects the cuts will be extended into 2018 “but with lesser compliance.” If the cuts aren’t extended, inventories will rise and prices will fall more than projected in 2018.
Global consumption of liquid fuels is projected to increase by 1.5 million barrels per day in 2017 and 1.6 million barrels per day in 2018. The majority of the rise in consumption will come from countries outside the Organization for Economic Cooperation and Development (OECD). Of the non-OECD countries, China and India will see the largest increases in consumption of liquid fuels. Global oil inventories are expected to remain flat for the second half of 2017 before rising 200,000 barrels per day in 2018.