EIA: This Week in Petroleum - 8 May 2019 - eng Избранное

Среда, 08 мая 2019 21:04

Inventory draws contribute to higher forecast crude oil prices

In its May 2019 update of its Short-Term Energy Outlook (STEO), the U.S. Energy Information Administration (EIA) forecasts that the Brent crude oil price will average $70 per barrel (b) in 2019 and $67/b in 2020 (Figure 1). This price forecast for 2019 and 2020 is higher than any previous STEO forecast in 2019. The 2019 Brent crude oil price forecast in the May STEO is $9/b higher than the January STEO forecast and more than $4/b higher than the April STEO forecast. The upward revision to the price forecast is a reflection of several factors, including higher-than-forecast actual prices in recent months, changes to the global supply and demand outlook resulting in tighter expected global oil market balances, and increased oil supply risks.

Figure 1. Brent crude oil price forecasts

The upward revision to EIA's price forecast reflects higher realized crude oil prices in early 2019. Brent crude oil prices averaged $63/b in the first quarter of 2019, which is $5/b higher than the January 2019 STEO forecast. Several factors have caused oil markets to be generally tighter and oil prices to be higher so far in 2019 than EIA forecasted at the beginning of the year.

In December 2018, members of the Organization of the Petroleum Exporting Countries (OPEC) agreed to cut crude oil production during the first six months of 2019. Compliance with these production cuts was greater than initially forecast in the January STEO. In addition, Venezuela's production declined more than expected. The January STEO forecasted OPEC production of crude oil and petroleum liquids during the first quarter of 2019 to average 36.3 million barrels per day (b/d), but the May STEO revised OPEC production levels for the first quarter of 2019 down to 35.8 million b/d.

In addition, U.S. production in the first quarter of 2019 was lower than initially forecasted in January. This lower-than-expected U.S. production reflects a combination factors including larger production declines in response to falling prices at the end of 2018 and weather outages.

As a result of both of these production declines, total global crude oil and other liquids production in the first quarter of 2019 fell an estimated 760,000 b/d lower than the January STEO forecast. With global economic growth in early 2019 slower than assumed in EIA’s January STEO forecast, EIA now estimates that global liquid fuels demand will be 210,000 b/d (0.2%) lower in the first quarter of 2019 than forecast in the January STEO. As a result of the production and consumption declines, EIA estimates that global oil inventories fell by 400,000 b/d in the first quarter of 2019, compared with an expected build of 150,000 b/d in the January STEO.

In the May STEO, EIA forecasts that the 2019 and 2020 balances will be tighter than the 2019 STEO forecasts. EIA expects 2019 global liquid fuels production to be 101.1 million b/d, down from 101.8 million b/d in the January STEO, and global liquid fuels consumption is forecast to be 101.4 million b/d. These levels result in an average global inventory draw of 250,000 b/d for 2019 in the May STEO (Figure 2). EIA expects oil markets will be the tightest in the second and third quarters of 2019, when forecasted global oil inventories decline by an average of 360,000 b/d. Given near-term market tightness, EIA expects Brent crude oil spot prices will average $73/b during this period before falling to an average of $70/b in the fourth quarter. Brent crude oil prices are forecast to decline to an average of $67/b in 2020 as EIA expects global oil inventories to build by more than 140,000 b/d.

Figure 2. World liquid fuels production and consumption balance

Several crude oil supply risks developed in early 2019 that contributed to EIA's tighter market balance forecast in the May STEO. On April 22, 2019, the United States issued a statement indicating that it would not reissue waivers, which allowed eight countries to continue importing crude oil and condensate from Iran, after they expired on May 2. Although EIA's previous forecasts had assumed no waivers would be granted to import Iranian oil after existing exemptions expired on May 2, EIA lowered its forecast of Iranian production in the May STEO to reflect increased certainty regarding waiver policy and enforcement. Declines in Iranian production contribute to overall OPEC production declines in EIA's May STEO.

Venezuela's crude oil production declines also drive total OPEC production lower during the forecast period. Recurring power outages in Venezuela may damage oil infrastructure, limiting Venezuela's ability to produce, move, and upgrade crude oil for export. Instability in Venezuela may also limit crude oil exports. Although EIA expects a general decline in Venezuela's production through the forecast period, significant downside risks exist. Recent events in Venezuela highlight the potential for instability and the inherent uncertainty in this forecast.

In Libya, any escalation in conflict could result in damage to oil export infrastructure or a security environment where oil fields are shut in. Either situation could lead to lower crude oil exports, reducing global supply by more than currently forecast. However, it is not EIA's protocol to forecast geopolitical disruptions, and forecast OPEC production levels reflect Libyan production remaining at current levels.

The petroleum production declines in Iran and Venezuela are expected to be partially offset by production increases by other OPEC members. Total OPEC crude oil and other liquids supply is forecast to be 35.4 million b/d in 2019 and 34.9 million b/d in 2020, down from the January forecast levels of 36.2 million b/d in 2019 and 36.1 million b/d in 2020 (Figure 3). EIA assumes that the December 2018 OPEC agreement to limit production will expire following the June 2019 OPEC meeting.

Figure 3. OPEC crude oil and other liquids production forecast

In the May STEO, EIA forecasts that non-OPEC production will increase. EIA expects that rising crude oil prices will contribute to an increase in U.S. crude oil production in the second half of 2019. In the May STEO, U.S. crude oil production increases from 11.9 million b/d in the first quarter of 2019 to 13.0 million b/d in the fourth quarter, averaging 12.4 million b/d for the year, 380,000 b/d higher than forecast in the January STEO. EIA forecasts that 2020 U.S. crude oil production will average 13.4 million b/d.

EIA forecasts Brazil's year-over-year crude oil and other liquids production will increase by 320,000 b/d in 2019 and 240,000 b/d in 2020 as a result of biofuels production growth and new offshore platforms coming online. After the expected expiration of the Vienna agreement in June, EIA forecasts that Russian crude oil and other liquids production will grow by 140,000 b/d in 2019 and by 220,000 b/d in 2020. Brazil and Russia are the second- and third-largest sources of non-OPEC supply growth, respectively.

U.S. average regular gasoline and diesel prices increase

The U.S. average regular gasoline retail price rose 1 cent from the previous week to $2.90 per gallon on May 6, more than 5 cents higher than the same time last year. The Rocky Mountain price increased nearly 8 cents to $2.92 per gallon, the West Coast price increased nearly 4 cents to $3.71 per gallon, the East Coast price rose more than 1 cent to $2.79 per gallon, and the Midwest price rose less than 1 cent, remaining at $2.77 per gallon. The Gulf Coast price fell nearly 3 cents to $2.56 per gallon.

The U.S. average diesel fuel price increased less than 1 cent, remaining at $3.17 per gallon on May 6, the same price as a year ago. The West Coast price increased nearly 4 cents to $3.77 per gallon, the Midwest price increased nearly 1 cent, remaining at $3.06 per gallon, and the Rocky Mountain price increased less than 1 cent to $3.19 per gallon. The Gulf Coast price fell more than 1 cent to $2.93 per gallon, and the East Coast price fell less than 1 cent, remaining at $3.19 per gallon.

Propane/propylene inventories rise

U.S. propane/propylene stocks increased by 1.0 million barrels last week to 60.0 million barrels as of May 3, 2019, 9.2 million barrels (18.0%) greater than the five-year (2014-2018) average inventory levels for this same time of year. Midwest, Gulf Coast, and East Coast inventories increased by 0.8 million barrels, 0.3 million barrels, and 0.1 million barrels, respectively. Rocky Mountain/West Coast inventories decreased by 0.1 million barrels. Propylene non-fuel-use inventories represented 9.6% of total propane/propylene inventories.

Retail prices (dollars per gallon)

Conventional Regular Gasoline Prices Graph. On-Highway Diesel Fuel Prices Graph.
 Retail pricesChange from last
Gasoline 2.897 0.010 0.052
Diesel 3.171 0.002 0.000

Futures prices (dollars per gallon*)

Crude Oil Futures Price Graph. RBOB Regular Gasoline Futures Price Graph. Heating Oil Futures Price Graph.
 Futures pricesChange from last
Crude oil 61.94 -1.36 -7.78
Gasoline 2.027 -0.074 -0.087
Heating oil 2.070 0.019 -0.084
*Note: Crude oil price in dollars per barrel.

Stocks (million barrels)

U.S. Crude Oil Stocks Graph. U.S. Distillate Stocks Graph. U.S. Gasoline Stocks Graph. U.S. Propane Stocks Graph.
 StocksChange from last
Crude oil 466.6 -4.0 32.8
Gasoline 226.1 -0.6 -9.7
Distillate 125.6 -0.2 10.5
Propane 59.951 1.011 21.280
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