Markets for oil, as well as other commodities and equities, have experienced significant volatility and price declines since the final week in February amid concerns over the economic effects of the 2019 novel coronavirus disease (COVID-19). More recently, markets fell after the Organization of the Petroleum Exporting Countries (OPEC) and partners failed to reach an agreement to continue crude oil production cuts. The U.S. Energy Information Administration (EIA) has focused on several underlying assumptions about OPEC's posture regarding targeted production output and what effect it may have on global oil balances and prices.
In its March Short-Term Energy Outlook (STEO), EIA forecasts Brent crude oil prices will average $43 per barrel (b) in 2020, down from an average of $63/b in 2019. For 2020, EIA expects prices will average $37/b during the second quarter and rise to $43/b during the second half of the year. EIA forecasts that Brent prices will rise to an average of $55/b in 2021 as a result of declining global oil inventories putting upward pressure on prices. EIA expects that global liquid fuels inventories will grow by an average of 1.0 million barrels per day (b/d) in 2020 after falling by about 0.1 million b/d in 2019 and that inventory builds will be largest in the first half of 2020, rising at a rate of 1.7 million b/d.