Fuel Projection Report: August 2021

At A Glance

U.S. regular gasoline retail prices averaged $3.14 per gallon (gal) in July. We expect that prices will average $3.12/gal in August before falling to $2.82/gal, on average, in 4Q21.

Brent crude oil spot prices averaged $75 per barrel (b) in July, up $2/b from June. We expect Brent prices will average $72/b from August through November. However, in 2022, we expect Brent prices to decline to an average of $66/b in 2022.

We estimate that 98.8 million barrels per day (b/d) of petroleum and liquid fuels were consumed globally in July, an increase of 6.0 million b/d from July 2020. We forecast that global consumption of petroleum and liquid fuels will average 97.6 million b/d for all of 2021. We forecast that global consumption of petroleum and liquid fuels will average 101.2 million b/d in 2022.

Global oil inventories averaged 1.8 million b/d during the first half of 2021 (1H21) and remained at almost 1.4 million b/d in July.

Refer to the detailed Crude Oil Report below for more details.

Do you want to estimate what fuel will cost your fleet next month? Try our fuel cost estimator.

In July, the natural gas spot price at Henry Hub averaged $3.84 per million British thermal units (MMBtu), which is up from the June average of $3.26/MMBtu. We expect the Henry Hub spot price will average $3.71/MMBtu in 3Q21 and $3.42/MMBtu for all of 2021.

We expect that U.S. consumption of natural gas will average 82.5 billion cubic feet per day (Bcf/d) in 2021. We expect U.S. natural gas consumption will average 83.8 Bcf/d in 2022.

We expect dry natural gas production will average 92.9 Bcf/d in the U.S. during 2H21 and then rise to 94.9 Bcf/d in 2022.

We estimate that U.S. natural gas inventories ended July 2021 at almost 2.8 trillion cubic feet (Tcf). We forecast that inventories will end the 2021 injection season (end of October) at 3.6 Tcf.

Refer to the detailed Natural Gas Report below for more details.

Crude Oil Report

The August Short-Term Energy Outlook (STEO) remains subject to heightened levels of uncertainty related to the ongoing recovery from the COVID-19 pandemic. U.S. economic activity continues to rise after reaching multiyear lows in the second quarter of 2020 (2Q20). U.S. gross domestic product (GDP) declined by 3.5 percent in 2020 from 2019 levels. This STEO assumes U.S. GDP will grow by 6.6 percent in 2021 and by five percent in 2022. The U.S. macroeconomic assumptions in this outlook are based on forecasts by IHS Markit. Our forecast assumes continuing economic growth and increasing mobility. Any developments that would cause deviations from these assumptions would likely cause energy consumption and prices to deviate from our forecast.

Brent crude oil spot prices averaged $75 per barrel (b) in July, up $2/b from June and up $25/b from the end of 2020. Brent prices have been rising this year as result of steady draws on global oil inventories, which averaged 1.8 million barrels per day (b/d) during the first half of 2021 (1H21) and remained at almost 1.4 million b/d in July. We expect Brent prices will remain near current levels for the remainder of 2021, averaging $72/b from August through November. However, in 2022, we expect that continuing growth in production from OPEC+ and accelerating growth in U.S. tight oil production—along with other supply growth—will outpace decelerating growth in global oil consumption and contribute to Brent prices declining to an average of $66/b in 2022.

We estimate that 98.8 million b/d of petroleum and liquid fuels were consumed globally in July, an increase of 6.0 million b/d from July 2020 but 3.4 million b/d less than in July 2019. We forecast that global consumption of petroleum and liquid fuels will average 97.6 million b/d for all of 2021, which is a 5.3 million b/d increase from 2020. We forecast that global consumption of petroleum and liquid fuels will increase by 3.6 million b/d in 2022 to average 101.2 million b/d.

U.S. regular gasoline retail prices averaged $3.14 per gallon (gal) in July, the highest monthly average price since October 2014. Recent gasoline price increases reflect rising crude oil prices and rising wholesale gasoline margins, amid relatively low gasoline inventories. We expect that prices will average $3.12/gal in August before falling to $2.82/gal, on average, in 4Q21. The expected drop in retail gasoline prices reflects our forecast that gasoline margins will decline from elevated levels, as is typical in the United States during the second half of the year.

We hope this forecast summary has been helpful. You can download this month’s full Fuel Projection Report in the following formats:

Do you want to estimate what fuel will cost your fleet next month? Try our fuel cost estimator.

Natural Gas Report

In July, the natural gas spot price at Henry Hub averaged $3.84 per million British thermal units (MMBtu), which is up from the June average of $3.26/MMBtu. We expect the Henry Hub spot price will average $3.71/MMBtu in 3Q21 and $3.42/MMBtu for all of 2021, which is up from the 2020 average of $2.03/MMBtu. Higher natural gas prices this year primarily reflect two factors: growth in liquefied natural gas (LNG) exports and rising domestic natural gas consumption for sectors other than electric power. In 2022, we expect the Henry Hub price will average $3.08/MMBtu amid rising U.S. natural gas production.

We expect that U.S. consumption of natural gas will average 82.5 billion cubic feet per day (Bcf/d) in 2021, down one percent from 2020. U.S. natural gas consumption declines in the forecast, in part, because electric power generators switch to coal from natural gas as a result of rising natural gas prices. In 2021, we expect residential and commercial natural gas consumption combined will rise by 1.2 Bcf/d from 2020 and industrial consumption will rise by 0.2 Bcf/d from 2020. Rising natural gas consumption in sectors other than the electric power results from expanding economic activity and colder winter temperatures in 2021 compared with 2020. We expect U.S. natural gas consumption will average 83.8 Bcf/d in 2022.

We estimate that U.S. natural gas inventories ended July 2021 at almost 2.8 trillion cubic feet (Tcf), which is six percent lower than the five-year (2016–20) average for this time of year. More natural gas was withdrawn from storage during the winter of 2020–21 than the previous five-year average, largely as a result of the colder-than-average February temperatures that constrained natural gas production while it increased consumption. We forecast that inventories will end the 2021 injection season (end of October) at 3.6 Tcf, which would be four percent below the five-year average.

We expect dry natural gas production will average 92.9 Bcf/d in the United States during 2H21—up from 91.4 Bcf/d in 1H21—and then rise to 94.9 Bcf/d in 2022, driven by natural gas and crude oil prices, which we expect to remain at levels that will support enough drilling to sustain production growth.

We hope this forecast summary has been helpful. You can download this month’s full Natural Gas Report in the following formats: