The oil price has been marching higher over this first week of June.
The Brent crude oil price, the international oil benchmark, ended May trading for US$72.66 per barrel. Today that same barrel is fetching US$76.35, up 5.1%.
That's a welcome trend for investors in ASX energy shares.
Though it's worth noting that Brent crude is still down from the US$85.91 per barrel it was worth on 2 January. And well below the US$123.58 per barrel from 12 months ago.
As you'd expect, that big retrace in the oil price has seen 2022's outsized profits for ASX energy shares begin to fall back to earth. Particularly for the big oil and gas companies like Santos Ltd (ASX: STO), Woodside Energy Group Ltd (ASX: WDS), and Beach Energy Ltd (ASX: BPT).
But in what could be good news for ASX energy shares, the United States Energy Information Administration (EIA) has just upped its forecast for the oil price.
Image source: Getty Images
What is the EIA forecasting for the global oil price?
In the wake of the Organization of the Petroleum Exporting Countries (OPEC) meeting over the weekend, the EIA has nudged up its forecast for the oil price in the latter half of 2023, with the agency predicting another leg up for crude oil in 2024.
Over the weekend, Saudi Arabia said it would cut its oil output by one million barrels per day in July. The nation left the door open to extending those cuts.
Though the other OPEC+ members didn't join Saudi Arabia in further cutting their own outputs, they said they would maintain the previously agreed supply cuts until the end of 2024.
According to the EIA:
Following the OPEC+ announcement on June 4 to extend crude oil production cuts through 2024, we forecast global oil inventories to fall slightly in each of the next five quarters. We expect these draws will put some upward pressure on crude oil prices, notably in late-2023 and early-2024.
The EIA increased its forecast for the Brent crude oil price by US$1 per barrel to an average of US$79 per barrel for the second half of this year. The EIA also increased its forecast for 2024 by US$9 per barrel to US$84 per barrel in 2024.
While that's not a huge increase from today's prices, the cost of pumping out a barrel of oil isn't impacted by its market price.
Meaning any increase in the oil price goes straight to the bottom line for the ASX energy stocks.
