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EIA expects Brent to average $52 in 2021
US crude production still declining, expected to increase in second half of year and in 2022; Henry Hub $2.95 per MMBtu this year Kristen Nelson Petroleum News
The U.S. Energy Information Administration said Feb. 9 in its Short-Term Energy Outlook for February that Brent crude oil spot prices averaged $55 per barrel in January, an increase of $5 per barrel from December, but down $9 per barrel from January 2020.
EIA said the higher January prices largely reflect the Jan. 5 announcement by Saudi Arabia that it would cut 1 million barrels per day in February and March, in addition to reduced production levels previously agreed to by the Organization of the Petroleum Exporting Countries and partner countries.
“EIA expects Brent crude oil prices to fall from an expected $56 per barrel in the first quarter of 2021 to an average of $52 per barrel over the rest of the year. The price drop reflects a rise in global oil supply that will slow the pace of global oil inventory withdrawals,” said EIA Acting Administrator Steve Nalley in a statement accompanying the outlook release.
The agency estimates that U.S. crude oil production averaged 11 million barrels per day in January, down from 11.1 million bpd in November, the most recent month for which there is historical data.
“EIA forecasts U.S. oil production to continue decreasing slightly in the first half of 2021 as declining production rates at existing oil wells offset production from newly drilled wells. However, we expect that U.S. crude oil production will increase in the second half of 2021 and in 2022,” Nalley said.
U.S. production is expected to decline early this year, reaching 10.9 million bpd in June, the agency said, because even though oil-directed drilling has increased in recent months, the number of active rigs remains lower than year-ago levels.
EIA estimates that U.S. production will average 11 million bpd this year, down from 11.3 million bpd in 2020 and 12.2 million bpd in 2019 and will rise to 11.5 million bpd in 2022.
Heightened levels of uncertainty EIA said, as it has in recent outlooks, that its February outlook is subject to heightened levels of uncertainty “because responses to COVID-19 continue to evolve.”
U.S. gross domestic product declined by 3.6% in 2020 and the outlook assumes U.S. GDP will grow by 3.8% this year and by 4.2% in 2022. EIA said its macroeconomic assumptions are based on forecasts by IHS Markit.
World petroleum and liquid fuels consumption is estimated at 93.9 million bpd for January, down 2.8 million bpd from January 2020, EIA said, with global consumption forecast to average 97.7 million bpd for all of 2021, up 5.4 million bpd from 2020. Consumption of petroleum and liquid fuel is forecast to increase by 3.5 million bpd in 2020 to average 101.2 million bpd.
In the U.S., gasoline consumption declined more on a volume basis than any other petroleum product last year. Consumption is forecast to rise this year, but remain lower than in 2019, with U.S. gasoline consumption forecast to average 8.6 million bpd in 2021 and 8.9 million bpd in 2022, up from 8 million bpd in 2020 but lower than the 9.3 million bpd consumed in 2019.
Natural Gas The Henry Hub natural gas spot price averaged $2.71 per million Btu in January, up from a December average of $2.59, EIA said.
“The U.S. benchmark Henry Hub natural gas spot price continues to increase after reaching its lowest annual average price in decades during 2020,” Nalley said. “EIA expects Henry Hub spot prices till average $2.95 per million British thermal units in 2021 and increase further to $3.27 per million British thermal units in 2022,” he said.
U.S. production of dry natural gas is forecast to average 90.5 billion cubic feet per day this year and 91 bcf per day in 2022, down from an average of 91.3 bcf per day in 2020 and 93.1 bcf per day in 2019.
Natural gas production through July 2022 is forecast to remain relatively flat, “the result of falling production in several of the smaller natural gas producing regions being offset by growth in other regions, most notably in the Appalachia and Haynesville regions,” EIA said.
The estimate for U.S. liquefied natural gas exports in January is 9.8 bcf per day, EIA said, “amid high spot natural gas prices in Asia.” Foggy conditions and high winds impacted exports at Sabine Pass LNG, Corpus Christi LNG and Cameron LNG, with weather-related closures and sporadic suspension of piloting services on several days in January.
2021 U.S. LNG exports are forecast to average 8.5 bcf per day, rising to an average of 9.5 bcf per day in 2022, EIA said, “surpassing the amount of natural gas exported via pipeline for the first time.”
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