EIA: Global oil prices on the upswing as inventories plummet

Oil prices are expected to rise for the remainder of this year as global oil inventories fall, according to the U.S. Energy Information Administration (EIA). The inventories are projected to fall by almost a half million barrels per day in the second half of this year.

The EIA released Tuesday (Sept. 12) the September Short-Term Energy Outlook that shows the international benchmark Brent crude oil price will be an average of $93 per barrel in the fourth quarter of this year. In August, the EIA projected it would be less than $88 per barrel.

The decline in inventories can be attributed to the oil production cuts from OPEC+ members. Saudi Arabia recently announced extending additional production cuts.

“We expect crude oil prices to rise as global oil inventories decrease through the end of this year,” said EIA Administrator Joe DeCarolis. “High oil prices combined with uncertain economic conditions could lessen global demand for petroleum products through 2024.”

Global production of liquid fuels is expected to continue to rise in 2023 and 2024. Non-OPEC+ countries will contribute to the production rise as OPEC+ continues to limit production.

As a result of the high crude oil prices, U.S. gasoline prices are projected to be higher than previously expected. In the fourth quarter, regular-grade gasoline is expected to average $3.69 per gallon, up from the August forecast of $3.57 per gallon.

According to AAA, the U.S. average price for regular unleaded fuel is $3.83 per gallon, up 12 cents from last year. In Arkansas, it’s $3.48, up 32 cents from last year. Arkansas motorists are paying the eighth-lowest gas price in the United States. Mississippi motorists are paying the least at $3.26.

Meanwhile, U.S. gasoline consumption is not expected to be as high as previously expected following a revision by the U.S. Census Bureau to its population estimates. The revision led the EIA to reduce the number of miles that U.S. motorists are driving. EIA expects U.S. gasoline consumption to average 8.9 million barrels per day in 2023, down slightly from the August forecast.

Following are other highlights from the Short-Term Energy Outlook:

• Natural gas consumption for electricity generation rose to a record high this summer, surpassing the previous high set in 2022. Increased demand for air conditioning, especially in Texas, Florida and Southern California, contributed to the consumption increase. DeCarolis noted natural gas and renewables “played a particularly strong role in the electricity fuel mix.”
• Propane prices at Mt. Belvieu are expected to average 77 cents per gallon this winter heating season from October to March. This is down from 81 cents per gallon last winter. The EIA will release its Winter Fuels Outlook on Oct. 11.