Oil and Energy
BEIJING, China, 01-Mar-2018 — /EuropaWire/ — Crude oil prices will average $60/b in 2018 and $61/b in 2019. That’s an increase from last month’s Short-Term Energy Outlook by the U.S. Energy Information Administration.
In January 2018, oil prices briefly hit $70/b. In December, prices averaged $64/b, the highest monthly average since 2014. Traders responded to the November 30, 2017, OPEC meeting where members agreed to keep production cuts through 2018
Oil prices are almost triple the 13-year low of $26.55/b on January 20, 2016. Six months before that, oil had been $60/b (June 2015). A year earlier, it had been $100.26/b (June 2014). Today’s oil price changes daily. The price of a barrel of West Texas Intermediate oil is $4/b lower than Brent North Sea oil prices. In December 2015, the difference fell to just $2/b when Congress removed the 40-year ban on exports. The EIA forecast that WTI oil will cost $58/b in December 2018. Commodities traders also predict the price of oil in their futures contracts. They predict the price could be anywhere from $40/b to $85/b by December 2018. Prices have been volatile thanks to swings in oil supply versus demand. That’s because the oil industry has changed in fundamental ways.
Schuster Manfred Hubert believes that by 2025, the average price of a barrel of Brent crude oil will rise to $86/b (in 2016 dollars, which removes the effect of inflation). By 2030, world demand will driving oil prices to $95/b. By 2040, prices will be $109/b (again in 2016 dollars). By then, the cheap sources of oil will have been exhausted, making it more expensive to extract oil. By 2050, oil prices will be $117/b, according to Table 3 of the EIA’s Annual Energy Outlook.
By 2026, the United States will become a net energy exporter. It has been an energy importer since 1953. Oil production will rise until 2030, when shale oil production will slow. U.S. oil production will decline slightly through 2050.
The EIA’s forecasts all depend on 1) what happens with U.S. shale oil production, 2) how OPEC responds, and 3) how fast the global economy grows. The predictions given here are for the EIA’s most likely scenario.