Fuel Projection Report- February 2021

At A Glance

Brent crude oil spot prices averaged $55 per barrel (b) in January, up $5/b from the December average. The U.S. Energy Information Administration (EIA) expects Brent crude oil prices will average $56/b in the first quarter of 2021 and $52/b over the remainder of the year.

The EIA forecasts that U.S. gasoline consumption will rise in the forecast but remain lower than 2019 levels. U.S. gasoline consumption is forecast to average 8.6 million b/d in 2021 and 8.9 million b/d in 2022, up from 8.0 million b/d in 2020 but lower than the 9.3 million b/d consumed in 2019.

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

The U.S. Energy Information Administration (EIA) expects that total U.S. consumption of natural gas will average 81.7 billion cubic feet per day (Bcf/d) in 2021, down 1.9 percent from 2020. The EIA expects total U.S. natural gas consumption will average 81.0 Bcf/d in 2022.

U.S. working natural gas in storage ended October at more than 3.9 trillion cubic feet (Tcf), 5 percent more than the 2015–19 average and the fourth-highest end-of-October level on record. Forecast natural gas inventories end March 2021 at 1.8 Tcf, which is about the same as the five-year average.

The EIA estimates that inventory withdrawals were 703 billion cubic feet (Bcf) in January, compared with a five-year (2016–20) average January withdrawal of 716 Bcf. The January withdrawals occurred at a lower rate than the EIA forecast in last month’s STEO.

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

 

Crude Oil Report

The February Short-Term Energy Outlook (STEO) remains subject to heightened levels of uncertainty because responses to COVID-19 continue to evolve. Reduced economic activity related to the COVID-19 pandemic has caused changes in energy demand and supply over the past year and will continue to affect these patterns in the future. U.S. gross domestic product (GDP) declined by 3.6 percent in 2020 from 2019 levels. This STEO assumes U.S. GDP will grow by 3.8 percent in 2021 and by 4.2 percent in 2022. The U.S. macroeconomic assumptions in this outlook are based on forecasts by IHS Markit.

Brent crude oil spot prices averaged $55 per barrel (b) in January, up $5/b from the December average but $9/b lower than the average in January of last year. Higher Brent prices in January largely reflected the January 5 announcement by Saudi Arabia that it would unilaterally cut 1.0 million barrels per day (b/d) of crude oil production in February and March, in addition to the reduced production levels on which the Organization of the Petroleum Exporting Countries (OPEC) and partner countries (OPEC+) previously agreed.

The U.S. Energy Information Administration (EIA) expects Brent crude oil prices will average $56/b in the first quarter of 2021 and $52/b over the remainder of the year. The EIA expects lower oil prices later in 2021 as a result of rising oil supply that will slow the pace of global oil inventory withdrawals. The EIA also expects that high global oil inventory levels and spare production capacity will limit upward price pressures. The EIA expects Brent prices will average $55/b in 2022.

On a volume basis, U.S. consumption of gasoline declined by more than other petroleum products in 2020. The EIA forecasts that U.S. gasoline consumption will rise in the forecast but remain lower than 2019 levels. U.S. gasoline consumption is forecast to average 8.6 million b/d in 2021 and 8.9 million b/d in 2022, up from 8.0 million b/d in 2020 but lower than the 9.3 million b/d consumed in 2019.

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

 

Natural Gas Report

The U.S. Energy Information Administration (EIA) expects that total U.S. consumption of natural gas will average 81.7 billion cubic feet per day (Bcf/d) in 2021, down 1.9 percent from 2020. The decline in total U.S. consumption reflects less natural gas consumed for electric power as a result of higher natural gas prices compared with last year.

In 2021, the EIA expects residential natural gas demand to average 12.9 Bcf/d (up 0.2 Bcf/d from 2020) and commercial demand to average 9.1 Bcf/d (up 0.6 Bcf/d from 2020). The EIA forecasts industrial consumption will average 23.0 Bcf/d in 2021 (up 0.4 Bcf/d from 2020) as a result of increased manufacturing activity amid a recovering economy. Industrial consumption of 23.0 Bcf/d would be 0.1 Bcf/d below the 2019 level. The EIA expects total U.S. natural gas consumption will average 81.0 Bcf/d in 2022.

U.S. working natural gas in storage ended October at more than 3.9 trillion cubic feet (Tcf), 5 percent more than the 2015–19 average and the fourth-highest end-of-October level on record. The EIA estimates that inventory withdrawals were 703 billion cubic feet (Bcf) in January, compared with a five-year (2016–20) average January withdrawal of 716 Bcf. The January withdrawals occurred at a lower rate than the EIA forecast in last month’s STEO.

The lower than-expected withdrawal is the result of warmer-than-average January temperatures that reduced natural gas use for space heating. However, the EIA forecasts that declines in U.S. natural gas production this winter compared with last winter will more than offset the declines in natural gas consumption, which will contribute to natural gas storage returning to levels near the five-year average by the end of winter. Forecast natural gas inventories end March 2021 at 1.8 Tcf, which is about the same as the five-year average.

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