U.S. Energy Information Administration - EIA - Independent Statistics and Analysis
Short-Term Energy Outlook
Global Petroleum and Other Liquids
EIA estimates that global petroleum and other liquid fuels inventory builds will average 1.0 million b/d in 2016. Inventory builds are expected to continue into 2017, but at a generally decreasing rate, averaging 0.3 million b/d for the year.
Global Petroleum and Other Liquids Consumption
Global consumption of petroleum and other liquid fuels is estimated to have grown by 1.4 million b/d in 2015. EIA expects global consumption of petroleum and other liquid fuels to increase by 1.5 million b/d in both 2016 and 2017, mostly driven by growth in countries outside of the Organization for Economic Cooperation and Development (OECD). Non-OECD consumption growth was an estimated 0.9 million b/d in 2015, and it is expected to be 1.3 million b/d in 2016 and 1.4 million b/d in 2017.
China's consumption of petroleum and other liquid fuels is forecast to grow by 0.4 million b/d in both 2016 and 2017. EIA expects that China's demand for hydrocarbon gas liquids (HGL) will continue to grow at a fairly steady pace as additional propane dehydrogenation (PDH) plants come online, including Oriental Energy's plant in Zhejiang province and Haiwei's plant in Hebei province. PDH plants use propane as an input to produce propylene, a key raw material for petrochemicals and plastics. Gasoline and jet fuel consumption in China is also expected to grow in 2016. Similarly, EIA projects continued strong growth in India's consumption of petroleum and other liquid fuels, particularly for transportation use. Consumption growth in India is expected to be between 0.3 million b/d and 0.4 million b/d in both 2016 and 2017.
OECD petroleum and other liquid fuels consumption rose by 0.5 million b/d in 2015. OECD consumption is expected to increase by 0.2 million b/d in 2016 and by less than 0.1 million b/d in 2017. Consumption growth in the United States and South Korea more than offsets decreases in consumption in OECD Europe and Japan in 2016 and 2017.
Non-OPEC Petroleum and Other Liquids Supply
EIA estimates that petroleum and other liquid fuels production in countries outside of the Organization of the Petroleum Exporting Countries (OPEC) grew by 1.5 million b/d in 2015, with more than half of the growth occurring in North America. EIA expects non-OPEC production to decline by 0.6 million b/d in 2016 and by 0.2 million b/d in 2017.
Changes in non-OPEC production are largely driven by changes in U.S. tight oil production, which has high production decline rates and relatively short investment horizons, making it among the most price-sensitive oil production globally. Forecast total U.S. production of liquid fuels declines by 0.5 million b/d in 2016 and by 0.1 million b/d in 2017, as declining onshore crude oil production is partially offset by expected growth in HGL production, Gulf of Mexico crude oil production, and liquid biofuels production. Outside of the United States, forecast non-OPEC production declines by less than 0.1 million b/d in 2016 and by 0.1 million b/d in 2017.
Non-OPEC petroleum and other liquids production, with the exception of U.S. tight oil plays, does not decline much through 2017 because of investments that were committed to projects when oil prices were higher. Although oil companies have reduced investments, most of the cuts have been to capital budgets that largely affect production beyond 2017.
Among non-OPEC producers outside of the United States, the largest declines are forecast to be in Asia and in the North Sea. After increasing between 2014 and 2016, production in the North Sea is expected to return to its long-term declining trend in 2017, as the planned starts of several projects are not enough to offset the region's natural decline rates. Production is expected to fall in China during 2016 and 2017 by nearly 0.2 million b/d as the three largest state-owned oil companies have announced capital expenditure cuts and output reductions, mainly at mature fields that require high investment levels to maintain production. Also, fewer new offshore developments in China are expected to come online in 2016 compared with 2015.
Non-OPEC unplanned supply outages in May were 1.1 million b/d, an increase of 0.7 million b/d from April. Most of the increase was in Canada, where wildfires caused disruptions that averaged about 0.8 million b/d in May, with a daily peak of more than 1.0 million b/d. Although the fires have subsided and projects are slowly restarting, it may take weeks for production to return to predisruption levels. EIA expects disrupted volumes in Canada to average 400,000 b/d in June.
OPEC Petroleum and Other Liquids Supply
OPEC crude oil production averaged 31.5 million b/d in 2015, an increase of 0.8 million b/d from 2014, led by rising production in Iraq and Saudi Arabia. Forecast OPEC crude oil production rises by 0.8 million b/d in 2016, with Iran accounting for most of the increase. Forecast OPEC production rises by an additional 0.7 million b/d in 2017. The forecast does not assume a collaborative production cut among OPEC members and other producers in the forecast period, as major OPEC producers are expected to continue their strategy of maintaining market share.
OPEC noncrude liquids production averaged 6.6 million b/d in 2015, and it is forecast to increase by 0.3 million b/d in both 2016 and 2017, led by increases in Iran and Qatar.
OPEC unplanned crude oil supply disruptions averaged nearly 2.6 million b/d in May, 0.1 million b/d higher than in April, as increased outages in Nigeria, Iraq, and Libya offset fewer outages in Kuwait. The 0.2 million b/d of shut-in production from Kuwait's oil worker labor strike in April returned to the market in May, while disruptions from the Neutral Zone persisted.
In May, disruptions in Nigeria increased to an average of nearly 0.8 million b/d, up from an average of 0.5 million b/d in April and an average of 0.3 million b/d in 2015. With the increasing disruptions, Nigeria's crude oil production fell to 1.4 million b/d in May, its lowest monthly average since the late 1980s. Disruptions in Nigeria increased as militants escalated attacks on oil and natural gas infrastructure in the Niger Delta. EIA expects Nigeria's disruptions to remain relatively high through 2017 compared with recent years.
In southern Iraq, power outages at some oil fields and inclement weather in the Basra Gulf contributed to a 50,000 b/d increase in average disruptions. In Libya, exports from Marsa al-Hariga, currently Libya's largest operating oil terminal, were temporarily halted from late April to mid-May, increasing the country's disruptions by an average 50,000 b/d for May. Exports from the terminal resumed after rival state oil companies signed a deal to restart exports.
OPEC surplus crude oil production capacity, which averaged 1.6 million b/d in 2015, is expected to be 1.5 million b/d in 2016 and 1.3 million b/d in 2017. Surplus capacity is typically an indicator of market conditions, and surplus capacity below 2.5 million b/d indicates a relatively tight oil market. However, high current and forecast levels of global oil inventories make the forecast low surplus capacity less significant.
OECD Petroleum Inventories
EIA estimates that OECD commercial crude oil and other liquid fuels inventories were 3.00 billion barrels at the end of 2015, equivalent to roughly 66 days of consumption. Forecast OECD inventories rise to 3.10 billion barrels at the end of 2016 and to 3.11 billion barrels at the end of 2017.
Crude Oil Prices
The monthly average spot price of Brent crude oil increased by $5/b in May to $47/b, which was the highest monthly average for Brent since October 2015. This was the fourth consecutive increase in the monthly average Brent price, the longest such stretch since May through September 2013. Increasing global oil supply outages were the main contributor to higher oil prices in May. Improving economic data and related indications that global oil demand growth is accelerating, plus ongoing declines in the U.S. rig count and in crude oil production, also contributed to rising prices.
Despite the recent increase in oil prices, EIA expects global oil inventory builds to average 0.8 million b/d during the second and third quarters of 2016, limiting upward price pressures in the coming months. Brent prices are forecast to average $46/b in the third quarter of 2016, before rising to $47/b in the fourth quarter as a result of expected slower growth in global oil inventories.
EIA expects global oil inventory draws to begin in the third quarter of 2017. The expected inventory draws contribute to forecast rising prices in the first half of 2017, with price increases expected to accelerate later in 2017. Brent prices are forecast to average $52/b in 2017, $1/b higher than forecast in last month's STEO. Forecast Brent prices reach an average of $58/b in the fourth quarter of 2017, reflecting the potential for more significant inventory draws beyond the forecast period.
In addition, a recent increase in global oil supply outages has taken pressure off storage capacity in the near term. These supply reductions were reflected in a narrowing differential for oil prices for near-term delivery compared with prices for delivery further in the future. Increased outages have reduced the possibility that inventory growth will cause storage costs to quickly rise and put downward pressure on oil prices.
Forecast West Texas Intermediate (WTI) crude oil prices average slightly less than Brent crude oil prices in 2016 and the same as the Brent price in 2017. The relative price parity of WTI with Brent in the forecast period is based on the assumption of competition between the two crudes in the U.S. Gulf Coast refinery market, as transportation price differentials to move the crudes from their respective pricing points to that market are similar.
The current values of futures and options contracts highlight the heightened volatility and high uncertainty in the oil price outlook (Market Prices and Uncertainty Report). WTI futures contracts for September 2016 delivery that were traded during the five-day period ending June 2 averaged $50/b, and implied volatility averaged 35%. These levels established the lower and upper limits of the 95% confidence interval for the market's expectations of monthly average WTI prices in September 2016 at $36/b and $69/b, respectively. The 95% confidence interval for market expectations widens over time, with lower and upper limits of $31/b and $83/b for prices in December 2016. At this time in 2015, WTI for September 2015 delivery averaged $60/b, and implied volatility averaged 33%, with the corresponding lower and upper limits of the 95% confidence interval at $45/b and $81/b.
|Global Petroleum and Other Liquids|
|2014||2015||2016 projected||2017 projected|
a Weighted by oil consumption.
b Foreign currency per U.S. dollar.
|Supply & Consumption||(million barrels per day)|
|OPEC Crude Oil Portion||30.77||31.55||32.35||33.04|
|Total World Production||93.31||95.74||96.23||97.02|
|OECD Commercial Inventory (end-of-year)||2721||2997||3099||3111|
|Total OPEC surplus crude oil production capacity||2.07||1.59||1.54||1.33|
|Total World Consumption||92.41||93.81||95.26||96.73|
|Primary Assumptions||(percent change from prior year)|
|World Real Gross Domestic Producta||2.8||2.4||2.1||2.9|
|Real U.S. Dollar Exchange Rateb||3.6||10.9||5.6||0.8|
Interactive Data Viewers
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|2016 Summer Fuels Outlook Slideshow||Apr-2016|
|2015 Summer Fuels Outlook Slideshow||Apr-2015|
|2014 Summer Fuels Outlook Slideshow||Apr-2014|
|Uncertainties in the Short-Term Global Petroleum and Other Liquids Supply Forecast||Feb-2014|
|Key drivers for EIA's short-term U.S. crude oil production outlook||Feb-2013|
|Brent Crude Oil Spot Price Forecast||Jul-2012|
|Probabilities of Possible Future Prices||Apr-2010|
|Energy Price Volatility and Forecast Uncertainty||Oct-2009|