Expectations for crude oil price in 2023 are now higher, EIA says

After the announcement by OPEC and its OPEC+ partner countries to reduce crude oil production by 2023, the EIA, in its Short-Term Energy Outlook (STEO), increased the forecast price of Brent to $85 per barrel, $3 above what the government agency forecast in March.

This represents 2.5% more than what was presented the previous month, and 2.8% above this Monday price.

The EIA expects that during the same period, global production of liquid fuels including gasoline, diesel and jet fuel, to exceed 101 million barrels per day by 2023.

“The OPEC+ production cut is certainly significant, but we expect growing global production —especially in North and South America— to offset those cuts,” said EIA Administrator Joe DeCarolis. “We expect that world oil production and demand for petroleum products will be relatively balanced this year. The biggest risk to our April forecast is slower-than-expected economic growth, which would limit growth in demand for fuels such as gasoline and jet fuel.”, quoted the EIA.

OPEC+ announced that it would cut crude oil production by 1.2 million barrels per day until the end of this year.

Barrels of crude oil

Will crude oil impact Gasoline and electricity prices for 2023?

The agency has an estimate of gasoline prices in the United States for this summer of $3.50 per gallon to a maximum of $3.60 and $3.70, this in June.

It also gasoline production will increase more than consumption in 2023, which would result in higher gasoline inventories, lower prices, and higher exports compared with 2022.

“Across the oil price cases we examined, our models still showed average U.S. household gasoline expenditures remaining lower than last year,” DeCarolis told the EIA.

On the subject of electricity, that which is generated through coal will have a decrease of approximately 17% for this year, due to the fact that around 5% of the US coal-fired electricity generation capacity was retired in the last 12 months.

“Lower natural gas prices and growing generation from renewable sources should reduce costs for generating electricity this summer compared with last summer,” DeCarolis said.