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Short-Term Energy Outlook

Release Date: July 7, 2021  |  Forecast Completed: July 1, 2021  |  Next Release Date: August 10, 2021  |  Full Report    |   Text Only   |   All Tables   |   All Figures

Petroleum Products

Gasoline prices: The front-month futures price of RBOB (the petroleum component of gasoline used in many parts of the country) settled at $2.27 per gallon (gal) on July 1, up 10 cents/gal from June 1 (Figure 2). The RBOB–Brent crack spread (the difference between the price of RBOB and the price of Brent crude oil) decreased by 4 cents/gal to settle at 46 cents/gal during the same period.

Figure 2: Historical RBOB front-month futures prices and crack spread

The RBOB–Brent crack spread decreased slightly in June, likely because of increased gasoline production that resulted in increased gasoline stocks. However, the crack spread remains higher than average for this time of year, likely as a result of higher fuel ethanol costs and expectations of stock draws in July and August. We estimate U.S. gasoline production averaged 10.0 million barrels per day (b/d) in June, which, if confirmed in monthly data, will be the highest gasoline production level since November 2019. Higher U.S. gasoline production has contributed to a stock build in June, which has not occurred during the month of June since 2014. U.S. Gasoline stocks typically decrease 3.6 million barrels (1.5%) from May to June according to the five-year (2016–20) average, but this year they increased 0.2 million barrels (0.1%), bringing gasoline stocks to their five-year June average.

Ultra-low sulfur diesel prices: The front-month futures price for ultra-low sulfur diesel (ULSD) for delivery in New York Harbor settled at $2.16/gal on July 1, up 8 cent/gal from June 1 (Figure 3). The ULSD–Brent crack spread (the difference between the price of ULSD and the price of Brent crude oil) decreased 5 cents/gal, settling at 35 cents/gal during the same period.

Figure 3: historical ULSD front-month futures price and crack spreads

The ULSD–Brent crack spread decreased slightly in June, although it is higher than average for this time of year. An increase in distillate production combined with relatively flat consumption contributed to the reduction in crack spreads. We estimate U.S. distillate production averaged 4.9 million b/d in June, the highest level since April 2020. The increase in U.S. distillate production contributed to distillate stocks increasing from 137.2 million barrels in May to 137.6 million barrels in June. Even though distillate production is increasing, it still remains 8% lower than its 2019 June level while distillate consumption has returned to its 2019 level. Because U.S. distillate production has not kept up with consumption this year, inventories remain below the five-year monthly average, contributing to higher-than-average crack spreads.

U.S. Petroleum and Other Liquids
  2019202020212022
Crude Oil prices (dollars per barrel)
WTI Spot Average 56.9939.1765.8562.97
Brent Spot Average 64.3441.6968.7866.64
Imported Average 57.9537.2564.3360.57
Refiner Average Acquisition Cost 59.3639.7265.1261.56
Retail prices including taxes (dollars per gallon)
Regular Gasoline 2.602.182.852.74
Diesel Fuel 3.062.553.163.09
Heating Oil 3.002.442.973.05
Production (million barrels per day)
Crude Oil 12.2511.3111.1011.85
Natural Gas Plant Liquids 4.825.165.285.73
Fuel Ethanol 1.030.910.971.00
Biodiesel 0.1120.1180.1170.129
Consumption (million barrels per day)
Motor Gasoline 9.318.038.738.97
Distillate Fuel Oil 4.103.784.074.26
Hydrocarbon Gas Liquids 3.143.203.283.57
Jet Fuel 1.741.081.391.71
Total Consumption 20.5418.1219.6420.68
Primary Assumptions (percent change from previous year)
U.S. Real GDP Growth 2.2-3.57.45.0
Heating Degree Days 0.6-9.37.00.1
Distillate-weighted Industrial Production -1.9-5.76.32.8

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