Oil prices are affected by multiple factors globally. Those can include unforeseeable conditions like weather, economic uncertainty, and political instability in different regions of the world.
An assessment of where oil prices are currently, as well as where they are anticipated to go over the next year, may help you determine if oil is the right investment for you.
Oil prices are based on two grades of crude oil. The first is the WTI (West Texas Intermedia) and the North Sea Brent (Brent). WTI is U.S. based at Cushing, and is the benchmark for U.S. oil prices, specifically. Brent, which comes from Northwest Europe, is used as the benchmark for international oil prices.
WTI Price Short-Term Forecast
The May 2022 Short Term Energy Outlook (STEO) produced by the U.S. Energy Information Administration, or EIA, shows WTI crude is anticipated to average $98.20/barrel throughout 2022, slipping to $93.24 next year.
Brent Price Short-Term Forecast
The EIA Short Term Energy Outlook (STEO) thinks that Brent crude will average $107 in Q2, before dipping to $103 in the second half and averaging $97 in 2023. Inflation and recession dampening demand are at the forefront of everyone’s mind. Russian sanctions are opposing that force with supply worries. Globally, we are facing low oil inventories and persistent upward oil price pressures.
The EIA Short Term Energy Outlook (STEO) estimate that 97.4 million b/d of petroleum and liquid fuels was consumed globally in April 2022, an increase of 2.1 million b/d from April 2021. Global consumption of petroleum and liquid fuels will increase by 1.9 million b/d in 2023 to average 101.5 million b/d.
U.S. crude oil production in the forecast averages 11.9 million b/d in 2022, up 0.7 million b/d from 2021. Short Term Energy Outlook (STEO) forecast that production will increase to more than 12.8 million b/d in 2023, surpassing the previous annual average record of 12.3 million b/d set in 2019.
Laredo Oil’s Outlook
Based on the information currently available, Laredo Oil anticipates U.S. oil prices to continue to climb as demand intensifies as a part of the COVID-19 economic recovery.
Contributing to upward price movement is a global supply chain dysfunction. This is slowing and/or completely preventing shipments of many items, including necessary energy components, from reaching their destination. This lack of necessary components leads to less available crude oil, consequently increasing the price per barrel due to lack of supply.
We believe the short-term outlook for oil is highly favorable and will continue to be so, as industries work toward achieving post-covid production levels and continue their upward trend in energy requirement. This demand, coupled with limited production, will naturally result in increased prices.
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