Fuel Projection Report – March 2021

At A Glance

The EIA (U.S. Energy Information Administration) expects crude oil production for OPEC (Organization of the Petroleum Exporting Countries) will average 25.3 million barrels per day (b/d) in April. The EIA expects OPEC crude oil production will rise to 26.6 million b/d in May.

Brent crude oil spot prices averaged $62 per barrel (b) in February, up $8/b from January’s average.

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

 

In February, the Henry Hub natural gas spot price averaged $5.35 per million British thermal units (MMBtu), which was up from the January average of $2.71/MMBtu.

The EIA (U.S. Energy Information Administration) expects Henry Hub spot prices to decline to an average of $2.88/MMBtu in the second quarter of 2021. The EIA expects that Henry Hub spot prices will average $3.14/MMBtu in 2021.

The EIA estimates that total natural gas consumption in February was the highest on record, at 111.8 Bcf/d. The EIA expects that U.S. consumption of natural gas will average 82.5 billion cubic feet per day (Bcf/d) in 2021.

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

 

Crude Oil Report

The EIA (U.S. Energy Information Administration) expects crude oil production for OPEC (Organization of the Petroleum Exporting Countries) will average 25.3 million barrels per day (b/d) in April, which is similar to expected production for March and down 1.6 million b/d from the EIA’s forecast for April OPEC production in last month’s STEO (Short-Term Energy Outlook).

The EIA expects OPEC crude oil production will rise to 26.6 million b/d in May. This increase reflects Saudi Arabia ending voluntary cuts of 1.0 million b/d, along with the relaxation of cuts that were extended through April at the March 4 OPEC+ (OPEC and partner countries) meeting. This forecast assumes OPEC will produce 27.9 million b/d on average in the second half of 2021, as OPEC+ generally increases crude oil output to supply rising global oil consumption.

Brent crude oil spot prices averaged $62 per barrel (b) in February, up $8/b from January’s average and up $7/b from February 2020. Rising Brent prices in February continued to reflect expectations of rising oil demand as both COVID-19 vaccination rates and global economic activity have increased, combined with ongoing petroleum supply limitations by OPEC+.

In addition, disruptions to petroleum supply from extreme winter weather in the United States (notably in Texas) put upward pressure on crude oil prices during February.

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

In February, the Henry Hub natural gas spot price averaged $5.35 per million British thermal units (MMBtu), which was up from the January average of $2.71/MMBtu and the highest nominal monthly average Henry Hub spot price since February 2014. Higher prices in February reflect increased demand for natural gas because of much colder-than-normal temperatures throughout most of the country. Price effects were amplified because the rise in demand occurred amid a drop in natural gas production due to well freeze-offs.

The EIA (U.S. Energy Information Administration) expects Henry Hub spot prices to decline to an average of $2.88/MMBtu in the second quarter of 2021. The EIA expects that Henry Hub spot prices will average $3.14/MMBtu in 2021, which is up from the 2020 average of $2.03/MMBtu. The EIA expects that continued growth in liquefied natural gas (LNG) exports, along with relatively flat production, will contribute to Henry Hub spot prices rising to an average of $3.16/MMBtu in 2022.

The EIA expects that U.S. consumption of natural gas will average 82.5 billion cubic feet per day (Bcf/d) in 2021, down 0.9% from 2020. The decline in U.S. natural gas consumption reflects less natural gas consumed for electric power generation because of higher natural gas prices compared with last year.

In 2021, the EIA expects residential natural gas consumption to average 13.1 Bcf/d (up 0.4 Bcf/d from 2020) and commercial consumption to average 9.3 Bcf/d (up 0.7 Bcf/d from 2020). The EIA forecasts industrial consumption will average 23.8 Bcf/d in 2021 (up 1.3 Bcf/d from 2020) as a result of increasing manufacturing activity amid a recovering economy.

The EIA estimates that total natural gas consumption in February was the highest on record, at 111.8 Bcf/d, because cold weather affected much of the United States and increased natural gas demand for heating and power generation. However, the EIA expects natural gas consumption in March to decline from February levels as temperatures return closer to normal, based on forecasts by the National Oceanic and Atmospheric Administration. The EIA expects U.S. natural gas consumption will average 81.6 Bcf/d in 2022.

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