Brent crude oil prices will average $72.8 per barrel in 2018 and to $73.7 per barrel in 2019, according to the most recent forecast from the US Energy Information Administration's monthly Short-Term Energy Outlook (EIA). This reflects an upward revision of $9.5/barrel to the EIA forecast for 2018 compared to last month's Outlook.
- The OECD Economic Outlook as of May 2018 was less bullish, pegging the real price of a barrel of Brent oil— i.e. price adjusted for inflation—at $69.4/barrel in 2018.
- Looking out to 2020, the IMF in its Primary Commodity Prices Projections released in July asserted that after modest growth in 2018, the nominal price of Brent crude will increase to $53.5/barrel by 2020 and West Texas Intermediate to $50.4/barrel.
- The World Bank anticipates that all three major benchmark oil prices, Brent, WTI, and Dubai, will continue to increase after 2020 to reach $70 per barrel in 2030.
Oil price forecasts depend on the interaction between supply and demand for oil on international markets. Among the most important supply-side factors weighing on pricing expectations are US shale oil production, US crude oil stocks, and OPEC oil supply.
- In May, OPEC announced that oil production cuts would be extended until March 2018. The agreement from OPEC, along with decreasing US crude oil inventories, has buoyed oil prices during the second half of 2017. By late September, Brent crude price reached $59.8/barrel, which was $16 higher than the lowest price so far this year ($44/bbl in June) and $14 higher than one year ago.
- But, the robust recovery of US shale oil activity, which is expected to continue through October, is broadly expected to limit price gains in the future.
- According to the OPEC Monthly Oil Market Report, world oil demand will increase by 1.3 million barrels per day in 2018, which is 0.1mb/d more than the increase expected from non-OPEC oil supply.