EIA’s January Short-Term Energy Outlook forecasts that world benchmark Brent crude oil will average US$61/bbl in 2019 and US$65/bbl in 2020, an increase from the end of 2018, but overall it will remain lower than the 2018 average of US$71/bbl. US benchmark West Texas Intermediate (WTI) crude oil prices were US$8/bbl lower than Brent prices in December 2018, and EIA expects this difference to narrow to US$4/bbl in the fourth quarter of 2019 and throughout 2020.
EIA expects US regular retail gasoline prices to follow changes to the cost of crude oil, dipping from an average of US$2.73/gal. in 2018 to US$2.47/gal. in 2019, before rising to US$2.62/gal. in 2020. Because each barrel of crude oil holds 42 gal., a US$1/bbl change in the price of crude oil generally translates to about a 2.4-cent-per-gal. change in the price of petroleum products such as gasoline, all else being equal.
EIA estimates that global petroleum and other liquid fuels inventories grew by an average rate of 0.4 million bpd in 2018 and by an estimated 1.0 million bpd in the fourth quarter of 2018. EIA expects growth in liquid fuels production in the United States and in other countries not part of the Organization of the Petroleum Exporting Countries (OPEC) will contribute to global oil inventory growth rates of 0.2 million bpd in 2019 and 0.4 million bpd in 2020.
Although EIA forecasts that oil prices will remain lower than during most of 2018, the forecast includes some increase in prices from December 2018 levels in early 2019 in order to keep up with demand growth and support the increased need for global oil inventories to maintain five-year average levels of demand cover. EIA expects crude oil prices to continue to increase in late 2019 and early 2020 because of an increase in refinery demand for light-sweet crude oil, which is the result of regulations from the International Maritime Organization that will limit the sulfur content in marine fuels used by ocean-going vessels.
EIA expects global oil production growth in 2019 to be led by countries that are not part of OPEC, particularly the United States. EIA expects non-OPEC producers will increase oil supply by 2.4 million bpd in 2019 which will offset forecast supply declines from OPEC members, resulting in an average of 1.4 million bpd in total global supply growth in 2019.
In 2020, EIA expects oil production to increase by 1.7 million bpd because of production growth in the United States, Canada, Brazil, and Russia, while overall OPEC crude oil production is expected to remain flat. EIA forecasts global oil demand to grow by 1.5 million bpd in 2019 and in 2020. In both 2019 and 2020, China is the leading contributor to global oil demand growth.
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