Price Volatility Will Remain Until Inventories Rebuild
Notes:
- In EIA’s forecasts, the base case assumptions have OECD inventories remaining low for the rest of the year. Even with EIA’s assumed OPEC leakage increases and rising Iraqi production, supply is not quite sufficient in the base case for a normal stock build in either the second or the third quarter.
- This year, prices fell with April’s increase in OPEC production, but recently rebounded to earlier high levels as strong demand and concerns over third quarter supply have added pressure to the market.
- There still is much uncertainty ahead. Prices could fall back if OPEC announces sizeable production increases at their June meeting. But prices could turn back up in the third quarter, depending on the weakness of the third quarter stock build in preparation for the high-demand winter quarters.