The Brent Crude oil price is expected to average $72 per barrel (b) in the second half of 2021 (2H21) and $67 per barrel (b) in 2022, according to the July Short-Term Energy Outlook (STEO), which is $6/b higher than the June STEO prediction. In addition, global production was revised down by 210,000 barrels per day (b/d) in 2H21, resulting in higher forecast inventory draws in 2H21 and lower forecast inventory builds in 2022, contributing to the higher price projection.
The Brent Crude oil price is expected to average $73/b in the third quarter of 2021 (3Q21) and $71/b in the fourth quarter of 2021, according to the July STEO (4Q21). We expect crude oil prices in the West Texas Intermediate (WTI) to continue a similar path. In the July STEO, WTI crude prices are expected to average $71/b in 3Q21, up to $6/b from the June STEO. Likewise, WTI prices are expected to be $68/b in 4Q21, according to the July STEO, up to $7/b from the June prediction.
In June 2021, the Brent Crude oil price averaged $73/b, up to $5/b from May. Since May 2019, June was the first month in which the Brent price averaged more than $70/b. Beginning in 2H21, we expect mild downward oil price pressures to emerge as forecast global oil production rises, leading inventories to drain at a slower rate.
Stock builds in 2022 and significantly smaller stock withdrawals in 2H21 than 1H21 will likely exert downward pressure on oil prices. We anticipated implied worldwide stock draws (the gap between consumption and production) of 210,000 b/d in 2H21 in the July STEO, a notable rise from last month’s projection of 20,000 b/d but still much less than the 1.7 million b/d in 1H21. In 2022, we expect implied stock builds to average 460,000 b/d, down from 510,000 b/d predicted last month.