With slower global growth and oil in ample supply, a fresh new look from the U.S. Energy Information Administration (EIA) is projecting that oil prices will be lower in 2020. West Texas Intermediate (WTI) crude oil was last seen trading at close to $52.25 per barrel, nearly a six-month low.

While the recent attack on Saudi Aramco’s Abqaiq crude oil processing facility initially disrupted about 5% of global liquid fuels, and while it caused a big short-lived pop above $60, most operational capacity was restored quickly and Saudi Aramco was able to meet customer demand by selling oil from inventories. Long-term effects from the disruption remain highly uncertain, and while this left the Saudi Arabian vulnerabilities in the open, the market proved that it could adapt quickly and smoothly to the disruption.

The EIA’s latest short-term energy outlook sees OPEC spare production capacity approaching pre-attack levels by January 2020, and it forecasts global liquid fuels inventories will build by an average of 0.3 million barrels per day in 2020 due to non-OPEC supply growth outpacing demand.

The new price summary forecast shows $56.26 on average for WTI in 2019 and then $54.43 in 2020. For Brent crude, the forecast is $63.37 per barrel in 2019 and $59.93 in 2020. Slower economic growth now appears to have increased the odds that oil demand will be weaker than expected due to recent data seen with negative growth in the manufacturing indicators from the United States and Germany. The short-term outlook said of Brent crude prices:

EIA forecasts global oil inventories will increase by 0.5 million b/d in the first half of 2020, which EIA expects will put downward pressure on crude oil prices. EIA forecasts Brent crude oil prices will average $59/barrel in the fourth quarter of 2019, falling to $57/barrel in the second quarter of 2020 before increasing to more than $62/barrel in the second half of 2020 as oil market balances firm. EIA forecasts Brent crude oil prices will average $60/barrel in 2020, $2/barrel less than in the September STEO.

With OPEC production expected to be 35.22 million barrels per day in 2019 (down from 37.29 million in 2018), the EIA is now forecasting production of 34.66 million barrels per day. Non-OPEC production of 63.52 million barrels per day in 2018 was projected to be 65.59 million barrels in 2019, rising to 67.78 million barrels in 2020.

All in all, total global oil production of 100.81 million barrels per day in 2018 was put at 100.80 million barrels per day in 2019 and then forecast to rise to 102.44 million barrels per day in 2020. Total global consumption of 99.98 million in barrels per day in 2018 was forecast to rise to 100.82 million barrels in 2019 and then to 102.12 million in 2020.

As for how this stacks up against the September short-term outlook, the EIA is calling for oil demand growth of 840,000 barrels per day (down about 50,000 from the September forecast) in 2019 and for 2020 global demand growth of about 1.3 million barrels (100,000 barrels lower than in September). The average forecast price for 2020 of $54.43 (WTI) is also down 3.7%, and Brent’s new target of $59.93 is down about 3.3% from the September forecast.

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