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 averaged 1.9 million b/d in 2015. The pace of inventory builds is expected to slow to an average of 0.9 million b/d in 2016. The market is expected to reach balance in 2017, with inventory draws during the second half of the year averaging 0.3 million b/d.
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 1.4 million b/d in 2016 and by 1.5 million b/d in 2017, mostly driven by growth in countries outside of the Organization for Economic Cooperation and Development (OECD). Non-OECD consumption growth was an estimated 1.0 million b/d in 2015, and it is expected to be 1.3 million b/d in 2016 and 1.5 million b/d in 2017.
This forecast reflects an upward adjustment to India's consumption growth in 2016 and 2017 of about 0.1 million b/d, raising the country's growth to 0.4 million b/d annually, mainly as a result of increased use of transportation fuels and of naphtha for new petrochemical projects. China's consumption of petroleum and other liquid fuels is forecast to grow by 0.4 million b/d in both 2016 and 2017, driven by increased use of gasoline, jet fuel, and hydrocarbon gas liquids (HGL), which more than offset decreases in diesel consumption. The significant rise in the use of HGL in China seen in 2015 will continue through the forecast period as new propane dehydrogenation (PDH) plants increase use of propane.
OECD petroleum and other liquid fuels consumption rose by 0.5 million b/d in 2015. OECD consumption is expected to increase by 0.1 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.
This forecast also includes a slight downward adjustment to petroleum and other liquid fuels consumption in OECD Europe in 2017 as a result of uncertainty related to the United Kingdom's vote to leave the European Union. EIA expects that the effect on oil consumption in the forecast period will be largely limited to Europe. Uncertainty over the United Kingdom's future relationship with the European Union could contribute to a reduction in business investment and consumer spending that would negatively affect oil demand growth. Additionally, there could be implications for emerging economies if credit availability is reduced—particularly if they rely on European banks, although EIA does not expect this to significantly affect oil consumption in the forecast period.
Non-OPEC Petroleum and Other Liquids Supply
EIA estimates that petroleum and other liquid fuels production in countries outside the Organization of the Petroleum Exporting Countries (OPEC) grew by 1.6 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 the United States, forecast non-OPEC production declines by 0.1 million b/d in both 2016 and 2017.
Non-OPEC petroleum and other liquids production, with the exception of output from 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 since oil prices fell, most of the cuts have been to capital budgets that largely affect production beyond 2017.
Among non-OPEC producers outside the United States, the largest declines in 2016 are forecast to be in China. EIA expects China's output to fall by 150,000 b/d in 2016 and by an additional 80,000 b/d in 2017 because of continued investment cuts and fewer new offshore developments. In 2017, the largest declines are in the North Sea and in Russia, which are forecast to decline by 170,000 b/d and 150,000 b/d, respectively, following forecast production growth in both areas this year.
Non-OPEC unplanned supply outages in June were 0.7 million b/d, a decrease of 0.4 million b/d from the May level. The decrease in unplanned outages was the result of Canadian oil sands production gradually returning from wildfire-related outages that began in May. Overall, Canada's unplanned outages averaged 0.4 million b/d in June, about half the May level.
OPEC Petroleum and Other Liquids Supply
Gabon rejoined OPEC as of July 1, following a 21-year hiatus from the organization. Gabon currently produces more than 0.2 million b/d of crude oil, and it is the second member to rejoin OPEC over the past seven months, following Indonesia's return to OPEC at the end of 2015. Beginning with this STEO, EIA includes Gabon's crude oil and other liquid fuels production in the OPEC total for both history and the forecast.
OPEC crude oil production averaged 31.8 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 0.5 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 about 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 2.3 million b/d in June, 0.3 million b/d less than in May because of lower outages in Nigeria, Libya, and Iraq. While Nigeria's outages decreased in June, they still remained high at more than 0.6 million b/d. Further reductions in Nigeria's disruptions are likely in July as Royal Dutch Shell lifted a force majeure on exports of Bonny Light in early July, following the restoration of production into Bonny Terminal. Nonetheless, Forcados and Brass River, which together account for roughly 0.3 million b/d of the disrupted volume, remain under force majeure. While some restoration of production is expected in the coming months, attacks on oil infrastructure continue, including attacks targeting a well, oil pipelines and three of Chevron's manifolds in early July.
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 3.09 billion barrels at the end of 2016 and then fall to 3.07 billion barrels at the end of 2017.
Crude Oil Prices
The monthly average spot price of Brent crude oil increased by $2/b in June to $48/b, which was the highest monthly average for Brent since October 2015. This was the fifth consecutive increase in the monthly average Brent price, the longest such stretch since May through September 2013. Although monthly average prices increased in June, daily oil prices ended June at slightly lower levels than they began the month. Significant outages of global oil supply contributed to rising oil prices in early June. However, concerns over future economic growth related to the United Kingdom's June 23 vote to exit the European Union and the easing of supply disruptions in Canada contributed to falling oil prices in late June.
EIA expects global oil inventory builds to average 0.6 million b/d in the second half of 2016, limiting upward price pressures in the coming months. Brent prices are forecast to average $48/b during the second half of 2016, which is relatively unchanged from current levels. However, daily and even monthly price variation could be significant as economic and geopolitical events affect market participants' expectations of oil market balances.
EIA expects global oil inventory draws to begin in the third quarter of 2017. The expectation of inventory draws contributes to forecast rising prices in the first half of 2017, with price increases accelerating later in 2017. Brent prices are forecast to average $52/b in 2017, unchanged from 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.
Average West Texas Intermediate (WTI) crude oil prices are forecast to be the same as Brent prices in 2016 and 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, because 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 October 2016 delivery that were traded during the five-day period ending July 7 averaged $49/b, and implied volatility averaged 37%. These levels established the lower and upper limits of the 95% confidence interval for the market's expectations of monthly average WTI prices in October 2016 at $35/b and $67/b, respectively. The 95% confidence interval for market expectations widens over time, with lower and upper limits of $32/b and $77/b for prices in December 2016. At this time in 2015, WTI for October 2015 delivery averaged $59/b, and implied volatility averaged 31%, with the corresponding lower and upper limits of the 95% confidence interval at $45/b and $79/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||30.99||31.76||32.53||33.04|
|Total World Production||93.31||95.73||96.15||96.79|
|OECD Commercial Inventory (end-of-year)||2721||2997||3090||3067|
|Total OPEC surplus crude oil production capacity||2.07||1.59||1.53||1.35|
|Total World Consumption||92.43||93.85||95.29||96.78|
|Primary Assumptions||(percent change from prior year)|
|World Real Gross Domestic Producta||2.8||2.5||2.3||2.9|
|Real U.S. Dollar Exchange Rateb||3.6||10.9||6.1||0.5|
Interactive Data Viewers
|Today In Energy||Daily|
|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|