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Short Term Outlook For Crude Oil & Natural Gas From EIA

Gasoil News - Published on Fri, 14 Jun 2019

Image Source: eia.gov
Crude Oil - Brent crude oil spot prices averaged USD 71 per barrel in May, largely unchanged from April 2019 and almost USD 6/b lower than the price in May of last year. However, Brent prices fell sharply in recent weeks, reaching USD 62/b on June 5. EIA forecasts Brent spot prices will average USD 67/b in 2019, USD 3/b lower than the forecast in last month’s STEO, and remain at USD 67/b in 2020. EIA’s lower 2019 Brent price path reflects rising uncertainty about global oil demand growth. EIA forecasts global oil inventories will decline by 0.3 million barrels per day in 2019 and then increase by 0.3 million b/d in 2020. Although global liquid fuels demand outpaces supply in 2019 in EIA’s forecast, global liquid fuels supply is forecast to rise by 2.0 million b/d in 2020, with 1.4 million of that growth coming from the United States. Global oil demand rises by 1.4 million b/d in 2020 in the forecast, up from expected growth of 1.2 million b/d in 2019. Annual US crude oil production reached a record 11.0 million b/d in 2018. EIA forecasts that U.S. production will increase by 1.4 million b/d in 2019 and by 0.9 million b/d in 2020, with 2020 production averaging 13.3 million b/d. Despite EIA’s expectation for slowing growth, the 2019 forecast would be the second-largest annual growth on record (following 1.6 million b/d in 2018), and the 2020 forecast would be the fifth-largest growth on record. For the 2019 summer driving season, which runs from April through September, EIA forecasts that US regular gasoline retail prices will average USD 2.76 per gallon, down from an average of USD 2.85/gal last summer. The lower forecast gasoline prices primarily reflect EIA’s expectation of lower crude oil prices this summer.

Natural gas - The Henry Hub natural gas spot price averaged USD 2.64/million British thermal units in May, almost unchanged from April. EIA expects strong growth in US natural gas production to put downward pressure on prices in 2019. EIA expects Henry Hub natural gas spot prices will average USD 2.77/MMBtu in 2019, down 38 cents/MMBtu from 2018. EIA expects natural gas prices in 2020 will again average USD 2.77/MMBtu. EIA forecasts that U.S. dry natural gas production will average 90.6 billion cubic feet per day in 2019, up 7.2 Bcf/d from 2018. EIA expects natural gas production will continue to grow in 2020, albeit at a slower rate, averaging 91.8 Bcf/d next year. US natural gas exports averaged 9.9 Bcf/d in 2018, and EIA forecasts that they will rise by 2.5 Bcf/d in 2019 and by 2.9 Bcf/d in 2020. Rising exports reflect increases in liquefied natural gas exports as new facilities come online. Rising natural gas exports are also the result of an expected increase in pipeline exports to Mexico. EIA estimates that natural gas inventories ended March at 1.2 trillion cubic feet, 15% lower than levels from a year earlier and 28% lower than the five-year (2014–18) average. EIA forecasts that natural gas storage injections will outpace the previous five-year average during the 2019 April-through-October injection season and that inventories will reach almost 3.8 Tcf at the end of October, which would be 17% higher than October 2018 levels and about equal to the five-year average.

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Posted By : Rabi Wangkhem on Fri, 14 Jun 2019
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