The U.S. on Tuesday forecast that crude oil markets will stay "fairly loose" over the next two years, noting that OPEC will have difficulty implementing pledged crude output cuts.
"The second Organization of Petroleum Exporting Countries agreement for substantial production cuts has failed, thus far, to support substantially higher prices," the Energy Information Administration, a wing of the U.S. Energy Department, said in a monthly forecast. "The outlook for supply and demand fundamentals indicates a fairly loose oil market balance over the next two years."
The Short-Term Energy Outlook issued Tuesday by the EIA is the first to
include monthly forecasts through December 2010.
In announcing two output cuts, OPEC has tried to shore up oil prices by agreeing to curtail output by a total of 4.2 million barrels a day from its September 2008 production level of 31.4 million barrels a day, but oil futures prices have continued their plunge, although they have stabilized somewhat since the beginning of the year. Oil futures, which recently traded around $38 a barrel, are down more than 70% from all-time highs.