Q2 will see worst impact on liquid fuels, effects will dissipate over next 18 months – EIA
HOUSTON (ICIS)–Reduced economic activity due to the coronavirus has significantly altered supply and demand patterns, with crude prices at their lowest levels in 20 years, the US Energy Information Administration said in its latest short-term energy outlook on Tuesday.
The uncertainty persists across EIA’s outlook for natural gas, electricity, coal and renewables, all attributable to social distancing, closed businesses and other coronavirus containment measures.
Revising its current forecast for domestic crude from the April STEO, EIA now forecasts US crude oil production will average 11.7m bbl/day in 2020, down 0.5m bbl/day from 2019.
EIA predicts Brent crude oil prices will average $34/bbl in 2020, down from an average of $64/bbl in 2019. EIA expects Brent prices will stay at around $23/bbl during Q2 before reaching $32/bbl during the second half of the year.
The largest impacts to US liquid fuels demand will occur in Q2 before gradually dissipating over the next 18 months, EIA predicts.
US jet fuel consumption will fall from 1.6m bbl/day in Q1 to an average of 0.8m bbl/day in the Q2. US distillate fuel oil consumption will fall by 0.6m bbl/day to average 3.3m bbl/day during the same period.
Price changes usually affect production after about six months, EIA said. However, current market conditions may reduce this lag as many producers have already decided to reduce capital spending and drilling levels.
EIA forecasts that natural gas prices will generally rise through the rest of 2020 due to lower natural gas production in the US. The total consumption of natural gas will average 81.7 billion cubic feet per day (bcf/day) in 2020, down 3.9% from the 2019 average, primarily because of lower industrial sector consumption of natural gas.
EIA forecasts that US liquefied natural gas (LNG) exports will average 5.8 bcf/day in Q2 and 4.8 bcf/day in Q3. US LNG exports are expected to decline through the end of the summer as a result of lower expected global demand for natural gas.
EIA will release its next short-term energy outlook on 9 June.
Thumbnail image by EIA
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