Who Are You Listening to About Crude Oil Prices?

There are numerous places to go find out the short-term trend (through the end of 2024) for crude oil futures prices. In fact, should you now have a preferred direction, you can find it somewhere, no matter what that preference is. In short, the only consensus among published sources is that oil prices will probably change. In this commentary, I will present the opinions of OPEC+, the EIA, and Reuters – all of them highly respected sources – and the rationales for their opinions. Finally, I will respond to their reasonings, and present a merged opinion of my own. But first, here is the graph of the front-month WTI futures.

Figure 1: Front-month futures of WTI, in USD

The price of WTI crude oil is fairly steady, in comparison to previous years, with a level medium-term trend and an uptrend in the short term.

We begin our presentation of published sources with OPEC+. They publish a downloadable report called the OPEC Monthly Oil Report 2024. The document gives the details of the way that their estimates are derived. They come up with estimates for global economic growth and use that to get an estimate for an increase in global demand for crude oil. They also estimate the supply of global crude oil, taking separately OPEC+ and non-OPEC+ countries. Subtracting those numbers returns an estimate of an increase of 0.9 million barrels per day (mb/d). This would imply that supply increases more than demand, suggesting that the price of crude oil will drop slightly.

Next, we look at the EIA. Their short-term forecast does not give the details behind their conclusions the way OPEC+ does, but they do give a much wider range of price forecasts.

The EIA does predict that Brent crude will increase from USD 84/barrel (b) in 1H24 to USD 89/b in 2H24, on declining global reserves of crude oil. They estimate that reserves dropped by

-0.5 million barrels per day (MMb/d) in 1H24, accelerating to -0.7 MMb/d in 2H24, implying an increase in price.

Finally, we look at Reuters. The article describes a potential change in Official Selling Price (OSP) of crude oil from Saudi Arabia to Asia (read, China). China had reduced the amount of Arab crude purchased for the past three months because of the availability of cheaper oil, and the Saudis are contemplating a price reduction to recapture some of those sales.

Note, however, these are the prices to the Singapore refinery, not to the rest of the world. However, this reduction will have an effect on global crude oil prices. Additionally, these price changes are too recent to have been included in the OPEC analysis above.

So, what is the result of combining these three forecasts? The OPEC+ and EIA forecasts are directly opposed, which has become typical lately, however the OPEC+ forecasts are generally more reliable. But the effects of Hurricane Beryl could easily throw more weight to higher crude oil prices, since none of these forecasts include those effects. So, my forecast is for slightly higher crude oil prices in the short-term as the repairs on the Texas oil rigs are made to bring them back up to speed. Then through the end of 2H24, the price of crude oil is liable to drop.