Crude Oil Report
The January Short-Term Energy Outlook (STEO) remains subject to heightened levels of uncertainty because responses to COVID-19 continue to evolve. Reduced economic activity and changes to consumer behavior in response to the COVID-19 pandemic caused energy demand and supply to decline in 2020. The ongoing pandemic and the success of vaccination programs will continue to affect energy use in the future.
U.S. regular gasoline retail prices averaged $2.18 per gallon (gal) in 2020, compared with an average of $2.60/gal in 2019. The U.S. Energy Information Administration (EIA) forecasts motor gasoline prices to average $2.40/gal in 2021 and $2.42/gal in 2022.
U.S. diesel fuel prices averaged $2.55/gal in 2020, compared with $3.06/gal in 2019, and the EIA forecasts them to average $2.71/gal in 2021 and $2.74/gal in 2022.
Economic assumptions are among the most important drivers of the EIA forecasts. The EIA bases their U.S. macroeconomic assumptions on forecasts by IHS Markit, and they base their global economic assumptions on forecasts from Oxford Economics. The U.S. real gross domestic product (GDP) fell 3.5 percent in 2020. IHS Markit forecasts the U.S. GDP will increase by 4.2 percent in 2021 and 3.8 percent in 2022.
Rising GDP contributes to the EIA’s forecast of rising total energy use in the United States during 2021 and 2022. After total U.S. energy consumption fell 7.8 percent in 2020, the EIA forecasts it will rise by 2.6 percent in 2021 and by 2.5 percent in 2022, reaching 97.3 quadrillion British thermal units (quads), 3.0 quads less than 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
Henry Hub natural gas spot prices averaged $2.03 per million British thermal units (MMBtu) in 2020. The U.S. Energy Information Administration (EIA) expects Henry Hub prices will rise to an annual average of $3.01/MMBtu in 2021, limiting natural gas use for power generation amid reduced natural gas production. The EIA forecasts Henry Hub prices will rise to an average of $3.27/MMBtu 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 five-year (2015–19) average and the fourth-highest end-of October level on record. 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. This decline will contribute to inventory withdrawals outpacing the five-year average during the remainder of the winter, which ends in March. Forecast natural gas inventories end March 2021 at 1.6 Tcf, 12 percent lower than the 2016–20 average.
The EIA estimates that U.S. natural gas consumption averaged 83.1 billion cubic feet per day (Bcf/d) in 2020, down 2.5 percent from 2019. The EIA expects that natural gas consumption will decline by 2.8 percent in 2021 and by 2.1 percent in 2022. Most of the decline in natural gas consumption is the result of less natural gas use in the power sector, which the EIA forecasts to decline because of rising natural gas prices. These declines are partly offset by rising natural gas use in other sectors.
We hope this forecast summary has been helpful. You can download this month’s full Natural Gas Report in the following formats: