|
EIA says $40 Brent this year, $47 in 2021
US crude averaged 10.6 million bpd in August, expected to average 11.4 million bpd this year, drop to 11.1 million bpd in 2021 Kristen Nelson Petroleum News
The U.S. Energy Information Administration said Nov. 10 in its Short-Term Energy Outlook that August crude oil production in the U.S. averaged 10.6 million barrels per day, down 400,000 bpd from July. August is the most recent month for which historical production volumes are available. EIA attributed the drop in August to hurricane disruption of U.S. Gulf of Mexico production, which averaged 1.2 million bpd in August, down 500,000 bpd from July.
The agency said U.S. production reached a two-and-a-half year low of 10 million bpd in May and is estimated to rise to 11.2 million bpd in November. Since May, EIA said, “when producers curtailed wells, U.S. crude oil production has increased mainly because tight oil operators have brought wells back online in response to rising prices.”
The agency expects U.S. crude production to decline to an average of 11 million bpd in the second quarter of 2021 “because new drilling activity will not generate enough production to offset declines from existing wells.”
U.S. drilling activity is expected to rise in the second half of 2021 with production reaching 11.3 million bpd in the fourth quarter of 2021.
EIA said that annual average production is expected to fall from 12.2 million bpd in 2019 to 11.4 million bpd this year and 11.1 million bpd in 2021.
Crude consumption EIA said uncertainty about response to the increase in COVID-19 cases worldwide, which reached a record high in October, leading to renewed economic pressure, “presents downside risk to EIA’s global oil demand forecast for the fourth quarter of 2020 and first half of 2021.”
The agency now expects global oil consumption to average 97.3 million bpd from the fourth quarter of 2020 through the first half of 2021, 400,000 bpd lower than it forecast in October.
“The pace of oil demand recovery will affect not only expectations of petroleum inventory withdrawals but also could affect planned oil supply increases from members of the Organization of the Petroleum Countries” and partner countries, scheduled to meet Nov. 30, EIA said.
The agency said it expects OPEC production “will generally be tailored to match the pace of global oil demand recovery.”
Crude spot prices “Brent crude oil prices in October were down a dollar from September as production in Libya came back online and worldwide COVID-19 cases rose,” EIA Administrator Dr. Linda Capuano said in a statement accompanying the short-term energy release. “EIA expects Brent prices will remain near October’s average of $40 per barrel for the rest of the year as high oil inventories and surplus production capacity limit upward price pressure,” she said.
EIA said global oil inventories are expected to continue falling in the coming months, but “expects high global oil inventory levels and surplus crude oil production capacity will limit upward pressure on oil prices” with Brent expected to remain near $40 through the end of the year.
“EIA forecasts Brent crude oil prices will increase to $47 per barrel in 2021 as global demand increases,” Capuano said.
The agency cited rises in global oil demand and forecast inventory draws as the cause of “some upward oil price pressures” next year.
Natural gas “October Henry Hub natural gas spot prices increased 47 cents from September to average $2.39 per million British thermal units,” Capuano said. “EIA expects growing global demand for U.S. LNG exports and rising domestic demand for space heating will increase prices to an average $3.42 per million British thermal units in January 2021,” she said.
LNG exports have been strong, Capuano said, with U.S. exports in October reflecting “the largest month-on-month increase since the United States began exporting LNG in 2016.”
“EIA expects LNG exports to return to late 2019 levels in November. We forecast exports will increase 31% from 2020 to 2021,” she said.
U.S. exports of LNG were estimated at 7.2 billion cubic feet per day in October, EIA said, up 2.3 bcf per day from September, and are expected to average 8.5 bcf per day in November and 8.4 bcf for 2021.
U.S. consumption of natural is expected to average 83.7 bcf per day this year, down 1.7% from 2019, EIA said, with the decline reflecting less heating demand in early 2020 combined with reduced commercial and industrial demand.
U.S. natural gas consumption is expected to average 79.4 bcf per day in 2021, down 5.2% due to rising natural gas prices reducing demand in the electric power sector.
| 