Fuel Projection Report: July 2019

Fuel Projection Report

Brent crude oil spot prices averaged $64 per barrel (b) in June, $7/b lower than in May 2019 and $10/b lower than the price in June of last year. The Energy Information Administration (EIA) forecasts Brent spot prices will average $67/b in the second half of 2019 and remain at that level in 2020. The EIA expects West Texas Intermediate (WTI) crude oil prices will average $62/b in the second half of 2019 and $63/b in 2020. The EIA’s forecast WTI price of $63/b for December 2019 should be considered in the context of NYMEX WTI futures and options contract values for December 2019 delivery that traded during the five-day period ending July 3, 2019. These contracts suggest a range of $40/b to $84/b encompasses the market expectation for December NYMEX WTI prices at the 95 percent confidence level.

U.S. regular gasoline retail prices averaged $2.72 gallon (gal) in June, down 14 cents/gal from May. The EIA expects monthly average gasoline prices peaked for the year in May at an average of $2.86/gal. The EIA expects regular gasoline retail prices to average $2.65/gal in 2019 and $2.76/gal in 2020.

The EIA forecasts that U.S. crude oil and petroleum product net imports will average 0.6 million b/d in 2019, down from an average of 2.3 million b/d in 2018. The EIA forecasts the United States will be a net exporter of crude oil and petroleum products at a rate of 0.1 million b/d by the fourth quarter of 2019 and by an average of 0.5 million b/d in 2020.

Natural Gas Projection

The Energy Information Administration (EIA) forecasts that U.S. dry natural gas production will average 91.3 billion cubic feet per day (Bcf/d) in 2019, up 8.0 Bcf/d from the previous record in 2018. The EIA expects annual average U.S. natural gas production will rise by 1.4 Bcf/d in 2020.

The EIA forecasts that Henry Hub natural gas spot prices will average $2.50 per million British thermal units (MMBtu) in the second half of 2019 and $2.77/MMBtu in 2020. The EIA’s forecast for the second half of 2019 is 29 cents/MMBtu lower than forecast in the June STEO. The lower forecast reflects recent price declines and the EIA’s updated assessment of U.S. drilling activity and average well productivity. The EIA’s forecast for the average Henry Hub price for December 2019 of $2.80/MMBtu should be considered in the context of NYMEX Henry Hub futures and options contract values for December 2019 delivery that traded during the five-day period ending July 3, 2019. These contracts suggest a range of $1.64/MMBtu to $4.03/MMBtu encompasses the market expectation for December Henry Hub natural gas prices at the 95 percent confidence level.

More Resources

For a deeper understanding of this forecast, access the full July fuel projection report and natural gas projection report from ARI. Additional new content on arifleet.com includes a customer success story about how one company leveraged their safety program and telematics technology to negotiate better insurance rates, and from a global perspective, fleet management advice on controlling supply chain management using a balance of standardized and flexible approaches.