US sees oil market oversupplied by early next year

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US sees oil market oversupplied by early next year

The US government projected that the global oil market will become oversupplied and prices will fall by early next year, cooling expectations that the White House may tap the nation’s emergency reserves.

Supply increases next year from OPEC nations as well as US drillers will ultimately pressure prices lower. The US benchmark crude will fall below $80 a barrel by December and reach as low as $62 by the end of next year and its global counterpart Brent will average $72 a barrel in 2022, the Energy Information Administration said in its Short-Term Energy Outlook on Tuesday. US pump prices will drop below $3 a gallon by February, the data show.

“We forecast that global oil stocks will begin building in 2022, driven by rising production from OPEC+ and the United States, along with slowing growth in global oil demand,” the EIA said.

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