EIA: production of global liquid fuels to outpace consumption in 2022
Published by Bella Weetch,
Editorial Assistant
Hydrocarbon Engineering,
Changes to both production and consumption of global liquid fuels have changed the EIA's forecast for balances between the two for the rest of 2022 and 2023. For most of 2021, more liquid fuels were consumed globally than produced. Starting in 2Q22, global liquid fuels production rose above consumption. According to the EIA's August Short-Term Energy Outlook, it is forecasted that during 2023, global supply and demand will be very closely matched. Production in 2023 is forecast to average 101.3 million bpd, and consumption to average 101.5 million bpd.
When consumption of liquid fuels is higher than production, prices generally rise. When production is more than consumption, prices generally decline. Due to changes in supply and demand in mid-2022, it is forecast that the price of Brent crude oil will average US$105/bbl in 2022 and US$95/bbl in 2023. The price of crude oil directly affects the price of petroleum products.
On the supply side, Russia produced more petroleum and other liquid fuels between May and July 2022 than was previously expected, despite sanctions and independent corporate actions.
Additional sanctions on Russia, effective December 2022 and February 2023, have already been announced. It is expected that most of Russia’s crude oil and about half of its petroleum products that will become subject to EU sanctions are likely to be sold to other markets. The sanctions will become effective between December 2022 and February 2023. The EIA expects Russia’s production to decline by 1.6 million bpd between the beginning of 4Q22 and the end of 1Q23.
There is an expected increase in production in other parts of the world between now and the end of 2023 to push global petroleum and liquid fuels production to average 100.1 million bpd during 2022 and 101.3 million bpd during 2023.
It is forecast that US crude oil production will average 11.9 million bpd in 2022 and rise to a record 12.7 million bpd in 2023. Future OPEC production decisions will also affect global supply. We expect OPEC to set higher production targets in 2022 and 2023, but some OPEC member countries may not be able to meet higher production targets.
On the consumption side, consumer sentiment has been decreasing as inflation remains high and borrowing costs have been increasing due to rising interest rates.
The University of Michigan’s survey of consumer sentiment recorded its lowest reading on record in June 2022, with data going back to November 1952. The survey showed that consumer sentiment began rising from its June low in July and August. Consumer sentiment in the Euro Area reached record lows in July.
Despite these factors that suggest downward pressure on petroleum and liquid fuels consumption, global consumption is expected to increase y/y during both 2022 and 2023. In 2021, global petroleum and liquid fuels consumption averaged 97.4 million bpd. This is forecast to rise to an average of 99.4 million bpd for 2022, and to average 101.5 million bpd for 2023.
Read the article online at: https://www.hydrocarbonengineering.com/refining/17082022/eia-production-of-global-liquid-fuels-to-outpace-consumption-in-2022/
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