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Oil prices will start rising mid-year – EIA

By BusinessNews Staff on January 16, 2015

By mid-year, oil prices are expected to start rising owing to a more balanced market occasioned by weakening supply and increasing demand, according to the United States Energy Information Administration’s Short-Term Energy Outlook for January 2015 released on Wednesday.

For now, price projections reflect a scenario in which supply is expected to continue to exceed demand, leading to inventory builds through the first three quarters of the year, the outlook explained.

Most of the projected increases in future global petroleum consumption are expected in developing countries, the EIA noted.

The growing uncertainty surrounding oil prices presents a major challenge to all price forecasts, it said, adding that Brent crude oil prices would average $58 per barrel this year and $75 per barrel in 2016, with annual average West Texas Intermediate prices expected to be $3 per barrel to $4 per barrel below Brent.

The EIA expects global petroleum and other liquids demand to grow by one million barrels per day in both 2015 and 2016 from an average of 91.4mbp/d in 2014. Nearly all the forecast demand growth comes from non-Organisation for Economic Cooperation and Development countries.

The biggest reduction in forecast for non-OECD consumption growth this year comes from a 0.2mbp/d decline in Russia’s consumption because of its economic downturn. Russia’s consumption is expected to decline by a similar amount in 2016.

China is expected to be the leading contributor to projected global consumption growth, with consumption expected to increase by an annual average of 0.3mbp/d over the next two years.

[Punch]

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