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EIA forecasts fuel consumption increase EIA forecasts fuel consumption increase
Growth expected in liquid fuels consumption of 1 million bpd this year, 1.2 million bpd in 2025, with most of that growth in Asia
Kristen Nelson Petroleum News
In its November Short-Term Energy Forecast, released Nov. 13, the U.S. Energy Information Administration said it expects growth in global oil consumption to be led by India, which accounts for 25% of growth in global consumption in 2024 and 2025.
The global increase in liquid fuels consumption is expected to be 1 million barrels per day this year, increasing to 1.2 million bpd in 2025.
The agency said both those increases are below the pre-pandemic 10-year annual average of 1.5 million bpd, "as well as below the oil demand growth seen in the pandemic recovery from 2021 to 2023."
The growth is led by non-OECD countries, mostly countries in Asia. In India, the leading source of current growth, liquid fuels consumption is expected to increase by 300,000 bpd both this year and next, "driven by rising demand for transportation fuels."
In China, growth is expected to be less than 100,000 bpd this year, although recovering to almost 300,000 in 2025. EIA noted it has revised China's consumption downward several times this year, based on limited consumption of transportation fuels because of rapidly expanding electric car ownership, rising use of liquefied natural gas for trucking and decelerating economic growth.
Natural gas With the weather forecast now slightly colder for the U.S. winter heating season (November through March) EIA said it has increased the amount of natural gas it expects to be consumed in the residential and commercial sectors to some 36 billion cubic feet per day, 4% above usage last winter and closer to the 2019-23 five-year average.
U.S. marketed natural gas production was flat this year after growing for two years. The agency said it estimated an average of 113 bcf per day, about the same as last year. In February average monthly production peaked at 115 bcf per day, averaging between 111 bcf and 114 bcf per day for much of the rest of the year.
"Production cuts announced by natural gas producers early in 2024 resulted in less production from the shale and tight formations so far this year compared with 2023," while Permian Basin production has increased.
In the Haynesville and Appalachia regions gas production is driven by price, "which reached record lows in early 2024," while in the Permian, where production is mostly associated gas produced along with oil, production is driven by oil production "and has continued to grow amid low natural gas prices."
EIA expects marketed natural gas to resume growing in 2025, averaging more than 114 bcf per day for the year, up 1% from the 2024 annual average, led by a 6% increase in the Permian and a 5% increase in the Eagle Ford compared to this year.
Henry Hub The U.S. benchmark Henry Hub spot price averaged $2.20 per million British thermal units in October, down 4% from a September average of $2.28.
Consumption declined in October, led by a 6 bcf per day, 14%, decline in gas consumption in the electric power sector, "offsetting an increase in consumption in the residential and commercial sectors." But electric power sector consumption was still up 13% from the five-year average for October, reflecting "lower natural gas prices and higher air-conditioning use in parts of the United States experiencing extended summer-like conditions."
EIA expects Henry Hub to rise in the next three months and average more than $2.80 per million Btu for the first quarter of 2025, with an average price of $2.90 for all of 2025, 33% higher than the 2024 average of $2.20, mainly due to increased LNG exports, forecast to increase by nearly 2 bcf per day in 2025 "with continued strong international demand for LNG as export capacity expands."
Refining capacity EIA said it expects U.S. refining capacity to be 17.9 million bpd by the end of 2025, down 3% from the beginning of the year.
Refinery margins -- the difference between the selling price and production cost -- for gasoline and diesel, the crack spreads, are expected to remain relatively unchanged in 2025.
"Crack spreads have been declining steadily since 2022, and we expect them to hold steady next year, even with the decrease in refining capacity," said EIA Administrator Joe DeCarolis.
LyondellBasell Industries plans to close its Houston refinery in the first quarter, removing nearly 264,000 bpd of domestic refining capacity, EIA said, and Phillips 66 has announced it will cease operations at its Los Angeles refinery in the fourth quarter of 2025, which will remove another 138,700 bpd of capacity.
"The good news from a consumer perspective is that lower crack spreads have resulted in reduced gasoline and diesel prices at the pump," DeCarolis said.
The agency expects gasoline to average about $3.20 per gallon and diesel about $3.60 next year. In 2023 gasoline averaged $3.50 per gallon and EIA forecasts an average of $3.30 this year.
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