Fuel Projection Report: June 2019

Fuel Projection Report

Global oil demand rises by 1.4 million b/d in 2020 in the forecast, up from expected growth of 1.2 million b/d in 2019.

Brent crude oil spot prices averaged $71 per barrel (b) in May, largely unchanged from April 2019 and almost $6/b lower than the price in May of last year. However, Brent prices fell sharply in recent weeks, reaching $62/b on June 5. The Energy Information Administration (EIA) forecasts Brent spot prices will average $67/b in 2019, $3/b lower than the forecast in last month’s STEO, and remain at $67/b in 2020. The EIA’s lower 2019 Brent price path reflects rising uncertainty about global oil demand growth.

Annual U.S. crude oil production reached a record 11.0 million b/d in 2018. The EIA forecasts that U.S. production will increase by 1.4 million b/d in 2019 and by 0.9 million b/d in 2020, with 2020 production averaging 13.3 million b/d. Despite The EIA’s expectation for slowing growth, the 2019 forecast would be the second-largest annual growth on record (following 1.6 million b/d in 2018), and the 2020 forecast would be the fifth-largest growth on record.

For the 2019 summer driving season, which runs from April through September, The EIA forecasts that U.S. regular gasoline retail prices will average $2.76 per gallon (gal), down from an average of $2.85/gal last summer. The lower forecast gasoline prices primarily reflect the EIA’s expectation of lower crude oil prices this summer.

Natural Gas Projection

The Energy Information Administration (EIA) estimates that natural gas inventories ended March at 1.2 trillion cubic feet (Tcf), 15 percent lower than levels from a year earlier and 28 percent lower than the five-year (2014–18) average. The EIA forecasts that natural gas storage injections will outpace the previous five-year average during the 2019 April-through-October injection season and that inventories will reach almost 3.8 Tcf at the end of October, which would be 17 percent higher than October 2018 levels and about equal to the five-year average.

The Henry Hub natural gas spot price averaged $2.64/million British thermal units (MMBtu) in May, almost unchanged from April. The EIA expects strong growth in U.S. natural gas production to put downward pressure on prices in 2019. The EIA expects Henry Hub natural gas spot prices will average $2.77/MMBtu in 2019, down 38 cents/MMBtu from 2018. The EIA expects natural gas prices in 2020 will again average $2.77/MMBtu.

More Resources

Access this fleet industry perspectivenatural gas spreadsheet and fuel report spreadsheet from ARI. Also,  read more to prepare for the upcoming summer driving season: calculate what idling is costing you and stay ahead of Mexico-U.S. tariffs.