• EIA raises Crude Oil cost forecast on geopolitical concerns.
• WTI churns around $77.80 per barrel.
• OPEC cuts offset by record US Crude Oil production.

West Texas Intermediate (WTI) US Crude Oil has settled into a rough range on Tuesday, failing to capture $78.40 per barrel before falling into $77.20 as barrel traders struggle to pick a direction heading into the midweek. The Energy Information Administration (EIA) adjusted its outlook and forecasts on Tuesday, adding weight to the ongoing tensions from Houthi attacks in the Red Sea and an extension to production cuts from the Organization of the Petroleum Exporting Countries (OPEC).

According to the EIA, uncertainty around attacks on civilian cargo ships in the Red Sea by Iranian-backed Yemeni rebels will continue to build a risk premium into barrel prices. The EIA upped its forecast on Brent Crude Oil prices to average $87.00 per barrel, up over 5% from the previous month’s forecast of $82 per barrel. The EIA also expects the OPEC production cap extension to carry through the end of 2024, capping excess production capacity and propping up barrel prices.

On the other hand, US Crude Oil production continues to break records, with American oil pumping reaching an all-time high of 12.9 million barrels per day in 2023, the most Crude Oil produced by any country, ever. US Crude Oil now accounts for nearly 13% of all global production. In December alone, the US pumped 13.3 million bpd out of the ground. Ever-increasing US Crude Oil production could put a significant crimp in EIA forecasts on global production growth.