The U.S. Energy Information Administration lowered its Brent crude price forecast on Tuesday despite an estimated 80,000 barrel per day drop in U.S. crude production.
In its latest short-term energy outlook, the agency said it now expects Brent crude prices to average $34 per barrel in 2016, down $3 per barrel from last month’s forecast.
The report forecast an average Brent crude price of $40 per barrel in 2017, down $10 per barrel from the agency’s previous estimate.
Forecast West Texas Intermediate crude prices are expected to average the same as Brent in 2016 and 2017.
However, the agency added that current values of futures and options contracts “suggest high uncertainty in the price outlook.”
Brent was trading at $40.01 per barrel around 12:30 p.m. on Thursday while WTI was trading at $37.49 per barrel.
U.S. crude oil production averaged an estimated 9.4 million barrels per day in 2015, and is forecast to average 8.7 million bpd in 2016 and 8.2 million bpd in 2017, the report said.
EIA estimates that crude oil production in February averaged 9.1 million bpd, down 80,000 bpd from January’s level.
Natural gas working inventories were 2.536 trillion cubic feet on February 26, 46 percent higher than the same week last year and 36 percent higher than the previous five-year average for the same week.
EIA forecasts that inventories will end the winter heating season at 2.288 tcf, a 54 percent year-over-year increase.
Henry Hub spot prices are forecast to average $2.25/million British thermal units in 2016 and $3.02/MMBtu in 2017, compared with an average of $2.63/MMBtu in 2015.