Inventory forecasts from Shell PLC (SHEL).

Summary

The current price of a barrel of West Texas Intermediate crude oil has fallen below $70, down from a high of nearly $90 in April and down 3% since the start of 2024. Oil prices have fallen sharply from the $$115- 120. level, reached in the first half of 22 when Russia invaded Ukraine. For 2024, we now expect an average price of $78, compared to $80 in 2023 and $95 in 2022. We expect a barrel of West Texas Intermediate crude to average $75 in 2025, up from current levels but lower at annual basis. with a trading range of $90-$65 for the year. The main drivers of long-term oil prices come from Econ 101: Global Supply and Demand. According to the US Energy Information Administration, there has been modest excess demand for oil in 2024: global consumption is estimated at 103.1 million barrels per day, while global production is estimated at 102.6 million barrels. But forecasts for 2025 show supply will exceed demand, likely putting a ceiling on oil prices. Of course, there are always wildcards, such as geopolitical developments ranging from wars (i.e. Russia’s invasion of Ukraine) to sanctions (Iran, Venezuela) to unrest in the Middle East, to the outcome of the US presidential and congressional meetings.