The agency now sees Brent averaging $96 this year and $84 next year while trimming its demand outlook. Crude slid below $98 before recovering to about $100 by afternoon.
Macro · FinancialMarkets.com · October 6, 2026 · Tickers: BNO, USO, XLE, XOP
The government's oil forecasters and the oil market pointed in opposite directions on Tuesday morning.
The Energy Information Administration raised its forecast for the average Brent crude price this year to $96 a barrel from $91 in its monthly Short-Term Energy Outlook. For 2027 it now expects $84, up from $74. In the same report it lowered its estimate of world oil demand to 102.4 million barrels a day for 2026, from 102.6 million, and to 104.6 million for 2027, from 105.0 million. "We expect inventories will continue falling through the end of 2026," the agency said.
The price path
Brent moved the other way. It fell to $97.09 a barrel in the morning, about 3.2% below Monday's settle of $100.32 and its lowest in about a month, before climbing back to around $100.40 by 2 p.m. Eastern. U.S. crude touched $86.88 and then recovered to about $89.30. Brent was near $110 only a few weeks ago.
The decline came as signs of recovering Gulf supply accumulated. In September, Gulf producers other than Iran shipped more than 81% of their prewar volumes, with Saudi Arabia leading the rebound. Saudi Arabia's energy minister said Tuesday that flows through the kingdom's East-West pipeline, which carries crude to Red Sea ports and bypasses the Strait of Hormuz, had reached 5.8 million barrels a day, against a capacity of 7 million.
The supply recovery has come alongside a string of incidents. At least seven involving tankers were logged near the Strait of Hormuz in a week, and talks between Washington and Tehran remain stalled.
What the forecast includes
The timing of the EIA's numbers matters. The agency completed the forecast on Oct. 1. It reflects a 40 million barrel exchange from the Strategic Petroleum Reserve announced Sept. 29. The 100 million barrels that Group of Seven governments agreed last week to draw from emergency stocks are not in it. The higher price path is therefore not a response to Tuesday's prices or to the G7 release.
Two readings
One reading is that flows are normalizing and the spot market is right to fade the risk premium. Saudi barrels are moving around Hormuz, Gulf exports are recovering and the G7 barrels are not yet in anyone's forecast.
A second reading is that the official forecaster sees a higher price path because inventories keep shrinking even with lower demand, and that Brent's quick rebound from below $98 shows buyers stepping in at that level.
Energy shares rose modestly, with the Energy Select Sector SPDR fund up about 0.8%.
The next inputs
Weekly U.S. inventory data on Wednesday, OPEC's monthly report on Oct. 13 and the September consumer price index on Oct. 14 come next. The EIA's November outlook will be the first to include the G7 release. Whether it keeps the 2027 forecast near $84 once those barrels are counted will show how much of the increase rests on inventories rather than disrupted supply.