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Crude oil prices edged lower Tuesday following a higher than expected forecast for U.S. crude production and a greater than expected increase in U.S. consumer prices in February.
In its latest Short-Term Energy Outlook, the U.S. Energy Information Administration raised its 2024 outlook for growth in domestic oil production by 260K bbl/day to 13.19M barrels, compared with its previous forecast for a gain of 170K bbl/day.
The EIA had predicted that U.S. production would decrease slightly through the middle of 2024 and not exceed the monthly output record of 13.3M bbl/day set last December until February 2025, but the agency now forecasts steadily increasing production with output surpassing last year’s record by Q4 2024.
On the demand side, the EIA sees total U.S. petroleum consumption rising by 200K bbl/day to 20.4M bbl/day in 2024, then by another 200K bbl/day to 20.6M bbl/day in 2025, higher than previously forecast.
Production cuts from the OPEC cartel and its allies will help push average WTI crude oil prices for 2024 by 5.8% to $82.15/bbl, up 5.8% from its previous outlook, and for Brent oil to $87/bbl, up by 5.6%, the EIA also forecast.
Front-month Nymex crude (CL1:COM) for April delivery ticked lower for the fourth straight session, closing -0.4% to $77.56/bbl, while front-month May Brent crude (CO1:COM) settled -0.3% to $81.92/bbl.
Meanwhile, front-month April Nymex natural gas (NG1:COM) ended -2.5% at $1.714/MMBtu, after the EIA cut its forecast for this year’s U.S. natgas prices to an average of $2.27/MMBtu, down 14.4% from its February forecast.
ETFs: (NYSEARCA:USO), (BNO), (UCO), (SCO), (USL), (DBO), (DRIP), (GUSH), (NRGU), (USOI), (UNG), (BOIL), (KOLD), (FCG), (UNL)
The U.S. government reported a 0.4% increase in the consumer price index for February, the largest gain since September, while the 12-month core rate slipped to 3.8% from 3.9%.
With the CPI readout “not inspiring expectations of rapid interest-rate cuts, there’s not a reason to be extremely bullish at this time” in oil, but there’s also “little reason to be extremely bearish,” which has helped maintain range-bound crude prices, DTN market analyst Troy Vincent told Marketwatch.
