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The EIA cuts it's US 2020 crude production estimate to 11.76 mbpd from 12.99 mbpd in its STEO. This move is in line with US producers cutting CapEx. These cuts fit into the anticipated OPEC and Russian cuts.

Oil Gas Sunset

 

Highlights

Global liquid fuels

Although all market outlooks are subject to many risks, the April edition of EIA’s Short-Term Energy Outlook is subject to heightened levels of uncertainty because the impacts of the 2019 novel coronavirus disease (COVID-19) on energy markets are still evolving.

US Oil Production

EIA has revised its current forecast of domestic crude oil production down from the March STEO, as a result of lower crude oil prices. EIA forecasts U.S. crude oil production will average 11.8 million b/d in 2020, down 0.5 million b/d from 2019. In 2021,

EIA expects U.S. crude production to decline further by 0.7 million b/d. If realized, the 2020 production decline would mark the first annual decline since 2016. Typically, price changes impact production after about a six-month lag. However, current market conditions, combined with the COVID-19 pandemic, will likely reduce this lag as many producers have already announced plans to reduce capital spending and drilling levels.

 

EIA April STEO Production

 

US Export Import of Crude

EIA forecasts that the United States will return to being a net importer of crude oil and petroleum products in the third quarter of 2020 and remain a net importer in most months through the end of the forecast period. This is a result of higher net imports of crude oil and lower net exports of petroleum products.

Net crude oil imports are expected to increase because as U.S. crude oil production declines, there will be fewer barrels available for export. On the petroleum product side, net exports will be lowest in the third quarter of 2020, when U.S. refinery runs are expected to decline significantly.

 

WTI Price Forecast

 

EIA April STEO WTI

 

Brent Price Forecast

EIA forecasts Brent crude oil prices will average $33/b in 2020, $10/b lower than in last month’s STEO and down from an average of $64/b in 2019.

EIA expects prices will average $23/b during the second quarter of 2020 before increasing to $30/b during the second half of the year. EIA forecasts that average Brent prices will rise to an average of $46/b in 2021, $10/b lower than forecast last month, as a return to declining global oil inventories puts upward pressure on prices.

Global Consumption

EIA estimates global petroleum and liquid fuels consumption averaged 94.4 million barrels per day (b/d) in the first quarter of 2020, a decline of 5.6 million b/d from the same period in 2019.

EIA expects global petroleum and liquid fuels demand will decrease by 5.2 million b/d in 2020 from an average of 100.7 million b/d last year before increasing by 6.4 million b/d in 2021. Lower global oil demand growth for 2020 in the April STEO reflects growing evidence of significant disruptions to global economic activity along with reduced expected travel globally because of COVID-19.

US Gasoline Consumption

EIA expects U.S. motor gasoline consumption to fall by 1.7 million b/d from the first quarter of 2020 to an average of 7.1 million b/d in the second quarter, before gradually increasing to 8.9 million b/d in the second half of the year.

US Jet Fuel Consumption

U.S. jet fuel consumption will fall by 0.4 million b/d from the first quarter of 2020 to average 1.2 million b/d in the second quarter. EIA forecasts that U.S. motor gasoline consumption will average 8.4 million b/d, a decrease of 9% compared with 2019,

US Distillate consumption

U.S. distillate fuel oil consumption would see a smaller decline, falling by 0.2 million b/d to average 3.8 million b/d over the same period. In 2020, EIA sees jet fuel and distillate fuel oil consumption will fall by 10% and 5%, respectively over the same period.

2020 Summer Driving season

For the April–September 2020 summer driving season, EIA forecasts U.S. regular gasoline retail prices will average $1.58 per gallon (gal), down from an average of $2.72/gal last summer (Summer Fuels Outlook).

The lower forecast gasoline prices reflect lower forecast crude oil prices and significantly lower gasoline demand in the second quarter of 2020 driven by COVID-19 travel restrictions and disruptions to domestic economic activity.

For all of 2020, EIA expects U.S. regular gasoline retail prices to average $1.86/gal and gasoline retail prices for all grades to average $1.97/gal.

Source EIA April STEO

From TradersCommunity News Desk

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