Fuel Projection Report: May 2021

At A Glance

We completed modeling and analysis for this report before the temporary closure of the Colonial Pipeline on May 7 as a result of a cyberattack. Although effects of the outage are not reflected in this report, we are closely following supply and price developments related to the outage.

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

Do you want to estimate what fuel will cost your fleet next month? Try our fuel cost estimator.

In April, the natural gas spot price at Henry Hub averaged $2.66 per million British thermal units (MMBtu), which is slightly higher than the March average of $2.62/MMBtu.

We expect the Henry Hub spot price will average $2.78/MMBtu in the second quarter of 2021 and will average $3.05/MMBtu for all of 2021.

We expect that U.S. consumption of natural gas will average 82.6 billion cubic feet per day (Bcf/d) in 2021.

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

 

Crude Oil Report

The May Short-Term Energy Outlook (STEO) remains subject to heightened levels of uncertainty because responses to COVID-19 continue to evolve. Economic activity has increased significantly after reaching multiyear lows in the second quarter of 2020. The increase in economic activity and easing of COVID-19-related restrictions have contributed to rising energy use.

U.S. gross domestic product (GDP) declined by 3.5 percent in 2020 from 2019 levels. This STEO assumes U.S. GDP will grow by 6.2 percent in 2021 and by 4.3 percent in 2022. The U.S. macroeconomic assumptions in this outlook are based on forecasts by IHS Markit.

Our forecast assumes continuing economic growth and increasing mobility with easing COVID-19-related restrictions, and any developments that would cause deviations from these assumptions would likely cause energy consumption and prices to deviate from our forecast.

We completed modeling and analysis for this report before the temporary closure of the Colonial Pipeline on May 7 as a result of a cyberattack. Although effects of the outage are not reflected in this report, we are closely following supply and price developments related to the outage.

Updates related to the outage will be reflected in Today in EnergyThis Week in Petroleum, and the Weekly Petroleum Status Report as they become available.

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

Do you want to estimate what fuel will cost your fleet next month? Try our fuel cost estimator.

 

Natural Gas Report

In April, the natural gas spot price at Henry Hub averaged $2.66 per million British thermal units (MMBtu), which is slightly higher than the March average of $2.62/MMBtu. We expect the Henry Hub spot price will average $2.78/MMBtu in the second quarter of 2021 and will average $3.05/MMBtu for all of 2021, which is up from the 2020 average of $2.03/MMBtu.

We expect natural gas prices will rise this year, primarily as a result of two factors: growth in liquefied natural gas (LNG) exports and rising domestic natural gas consumption in the residential, commercial, and industrial sectors. In 2022, we expect the Henry Hub price will fall to an average $3.02/MMBtu amid slowing growth in LNG exports and rising production.

We expect that U.S. consumption of natural gas will average 82.6 billion cubic feet per day (Bcf/d) in 2021, down 0.7 percent from 2020. U.S. natural gas consumption declines in the forecast, in part, because electric power generators switch to coal from natural as a result of rising natural gas prices.

In 2021, we expect residential and commercial natural gas consumption together will rise by 1.0 Bcf/d from 2020 and industrial consumption will rise by 0.8 Bcf/d from 2020. Rising consumption outside of the power sector results from expanding economic activity and colder temperatures in 2021 compared with 2020. We expect U.S. natural gas consumption will average 82.5 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: