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EIA: Brent is headed up, Henry Hub flat
Gasoline prices expected to be lower than 2023, as motorists using less than before pandemic; jet fuel usage exceeds pre-pandemic Kristen Nelson Petroleum News
The U.S. Energy Information Administration said Aug. 6 when it released its Short-Term Energy Outlook for August that it is forecasting natural gas prices to remain relatively low, less than $2.50 per million British thermal units, through October, and to average $2.30 per million Btu this year, down from $2.50 in 2023, before rising to average $3.30 in 2025, based on "falling consumption and flat production."
Crude prices, which have fallen recently, are expected to rise in the second half of the year. The Brent crude oil spot price was $81 per barrel at the end of July, and EIA said it expects the price to return to between $85 and $90 per barrel by the end of the year. Brent averaged $82 per barrel last year and is forecast to average $84 this year and $86 in 2025, with the main upward price pressure coming from falling global oil inventories.
"The good news from a consumer perspective is that even though we expect oil prices to increase, we expect gasoline prices through this year and next year to remain lower than they were in 2023," said EIA Administrator Joe DeCarolis. "U.S. motorists are using less gasoline than they did before the pandemic, and we expect that to help keep gasoline prices from climbing with oil prices."
Liquids production Current OPEC+ production cuts are limiting world oil production growth, EIA said, but growth outside of OPEC+ is expected to remain strong, with a global increase in production of petroleum and other liquid fuels of 600,000 barrels per day in 2024.
A 1.3 million bpd production decrease in OPEC+ countries this year is offset by more than 1.8 million bpd of increased production from non-OPEC+ countries, led by the United States, Canada, Guyana and Brazil, the agency said.
In 2025 liquid fuels production is forecast to increase by 2.1 million bpd as OPEC+ production cuts end through the year, with OPEC+ production increasing 700,000 bpd and non-OPEC+ production up by 1.4 million bpd.
Oil consumption EIA said it is forecasting a 1.1 million bpd increase in global liquid fuels consumption this year, and a 1.6 million bpd increase in 2025, down from a 1.8 million bpd increase it forecast in July. "Most of the reduction in our oil consumption forecast is in China, where we expect slowing economic growth till continue to reduce diesel consumption," the agency said.
Jet fuel consumption is expected to rise, based on increased air travel, up 3% more in the U.S. this year compared to 2023 with another 3% increase forecast for 2025, when U.S. jet fuel consumption is expected to exceed the 2019 pre-pandemic level, with 2025 jet fuel prices expected to rise by more than other fuels.
"Jet fuel consumption is primarily driven by commercial air travel demand, which can be influenced by economic activity, employment, and the cost of air travel," EIA said.
Although passenger travel volumes from January through July of this year were up 6% compared to the same period in 2019 and 2023, jet fuel consumption remains below 2019 levels because commercial airlines are continuing to improve the fuel economy of their fleets, U.S. airlines are shifting to flying larger and fuller aircraft -- flying more passengers per flight than in 2019 -- and passengers are taking fewer international flights, which, EIA said, consume more fuel.
Natural gas U.S. dry natural gas production averaged 103 billion cubic feet per day up July, up some 1% from June, with August production forecast to be about the same as July, although 1% less than August 2023.
EIA said record low Henry Hub natural gas spot prices in the first half of 2024 "led producers to curtail natural gas production earlier this year."
The agency is forecasting 2024 natural gas production to average 103 bcf per day, down slightly from last year, and then to increase to an average of 105 bcf per day in 2025 based on an increasing Henry Hub price and growing natural gas demand by liquefied natural gas projects schooled to come online in the second half of this year and in 2025.
U.S. natural gas consumption this year is forecast to be about 1% above 2023 this year, averaging 90 bcf per day, with increasing residential, commercial and electric power consumption offsetting declines in the industrial sector. Consumption in 2025 is forecast to decline by 1% because of less electric power sector consumption, based on an assumption that the summer of 2025 will be slightly cooler than this summer, reducing electricity generation -- along with an increase in electric generation by solar power.
EIA said solar is the fastest growing source of electricity in the U.S., expected to account for 5% of power generation this year, up from 4% in 2023 and increasing to 7% in 2025.
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