Fuel Projection Report: May 2019

Fuel Projection Report

For the 2019 summer driving season, which runs from April through September, the Energy Information Administration (EIA) forecasts that U.S. regular gasoline retail prices will average $2.92 per gallon (gal), up from an average of $2.85/gal last summer. The higher forecast gasoline prices primarily reflect the EIA’s expectation of higher gasoline refining margins this summer, despite slightly lower crude oil prices.

The EIA forecasts global oil inventories will decline by 0.2 million barrels per day (b/d) in 2019 and then increase by 0.1 million b/d in 2020. Global demand outpaces supply in 2019 in the EIA’s forecast, but global liquid fuels supply then rises by 1.9 million b/d in 2020, with 1.5 million of that growth coming from the U.S. Global oil demand rises by 1.5 million b/d in 2020 in the forecast, up from expected growth of 1.4 million b/d in 2019.

The EIA forecasts that crude oil production in the Organization of the Petroleum Exporting Countries (OPEC) will average 30.3 million b/d in 2019, down by 1.7 million b/d from 2018. In 2020, the EIA expects OPEC crude oil production to fall by 0.4 million b/d to an average of 29.8 million b/d. Production in Venezuela and Iran account for most of the OPEC output declines in 2019 and in 2020, but the EIA expects these declines to be partially offset by production increases from other OPEC members.

Brent crude oil spot prices averaged $71 per barrel (b) in April, up $5/b from March 2019 and just below the price in April of last year. The EIA forecasts Brent spot prices will average $70/b in 2019 and $67/b in 2020, both about $5/b higher than in last month’s STEO, compared with an average of $71/b in 2018. The EIA’s higher Brent crude oil price forecast reflects tighter expected global oil market balances in mid-2019 and increasing supply disruption risks globally.

Natural Gas Projection

The Henry Hub natural gas spot price averaged $2.64/million British thermal units (MMBtu) in April, down 31 cents/MMBtu from March. Prices fell as a result of warmer than-normal temperatures across much of the U.S., which reduced the use of natural gas for space heating and contributed to above-average inventory injections during the month. The Energy Information Administration (EIA) expects strong growth in U.S. natural gas production to put downward pressure on prices in 2019 and in 2020. The EIA expects Henry Hub natural gas spot prices will average $2.79/MMBtu in 2019, down 36 cents/MMBtu from 2018. The forecasted 2020 average Henry Hub spot price is $2.78/MMBtu.

The EIA forecasts that dry natural gas production will average 90.3 billion cubic feet per day (Bcf/d) in 2019, up 6.9 Bcf/d from 2018. The EIA expects natural gas production will continue to grow in 2020 to an average of 92.2 Bcf/d.

The EIA estimates that natural gas inventories ended March at 1.2 trillion cubic feet (Tcf), 16 percent lower than levels from a year earlier and 29 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 April-through-October injection season and that inventories will reach 3.7 Tcf at the end of October, which would be 15 percent higher than October 2018 levels and about equal to the five-year average.

More Resources

Access this timely fleet industry perspective, natural gas spreadsheet and fuel report spreadsheet from ARI and read more from some of our industry experts: Chris Clark shares information about how to sell your used forklifts and other commercial equipment, and Kyle Kwelty offers advice on identifying fleet priorities in order to reach your goals.