The United States Energy Information Administration (EIA) updated its short-term outlook on crude oil prices for 2016 and 2017 by US$1 and US$3 per barrel, respectively.
In its monthly Short-Term Energy Outlook Report, the organisation estimates the average price is expected to stand around US$43 per barrel in 2016 and US$52 per barrel in 2017.
“Despite the recent increase in oil prices, EIA expects global oil inventory builds to average 0.8 million bpd during the second and third quarters of 2016, limiting upward price pressures in the coming months”, the report reads.
Crude Oil Price Forecasts To Rise
Despite the positive forecast, the EIA report stated there is a “high uncertainty in the price outlook”.
It adds that the West Texas Intermediate (WTI) is expected to be slightly below that of Brent throughout this year, “but the two would be equal by 2017”.
According to the report, Brent prices are expected to average US$46 per barrel in the third quarter of the year, before rising to US$47 billion in the fourth quarter “as a result of expected slower growth in global oil inventories”.
Overall, EIA expects a slowdown in global inventories to begin in the first quarter of 2017, contributing to rising prices in the first half of next year.
In 2017, Brent prices are expected to average US$52 bpd, reaching an average of US$58 bpd in the fourth quarter.
Highest Increase Since October 2015
The monthly average spot price of Brent crude oil increased by US$5 to US$47 in May, the highest monthly average since October 2015 and also the fourth consecutive increase in the monthly average Brent price.
This was mainly caused by oil supply outages, improving economic data and continued declines in crude oil production.
On Tuesday, oil prices went up by more than 1%, hitting a record high for the year, with US crude settling above US$50 per barrel for the first time in almost a year.