Notable Forecast Changes

• Russia’s liquid fuels production in the May STEO averages 10.0 million barrels per day (b/d) in 2022, which is 0.4 million b/d less than we forecast in the April STEO. Our forecast for Russia’s production averages 9.1 million b/d in 2023, which is 0.6 million b/d less than we forecast in the April STEO. The updated forecast reflects a larger drop in production during April than we had expected, lowering the starting point for our forecast.

• We have reevaluated our modeling of electricity generation to better account for the current constraints on the deliveries of coal and inventories at coal-fired power plants. Coal-fired power plants have been running more selectively in recent months as a result of low coal inventory levels and reduced abilities to replenish those inventories because of mine closures, rail capacity constraints, and labor market tightness. Coal plants have been running at high levels during peak demand periods in the winter and summer, but scaling-back operations during the shoulder months to conserve coal supply. These changes contributed to a shift toward natural gas generation and away from coal compared with our forecast in the April STEO, despite higher natural gas prices in this forecast. We now forecast coal generation in 2022 will decline by 30 billion kilowatthours (kWh) (3%) compared with a forecast increase of 27 billion (3%) kWh in the last STEO. Conversely, forecast natural gas generation rises by 13 billion kWh (1%) in this STEO compared with a forecast decline of 66 billion kWh (5%) in last month’s outlook.

• The Henry Hub spot price in our forecast averages $7.42 million British thermal units (MMBtu) in 2022, which is $2.19/MMBtu higher than our forecast in the April STEO. The higher forecast is mostly the result of updates to our power generation model to better account for coal market constraints.

• We expect natural gas inventories will end October at almost 3.4 trillion cubic feet, which is 9% below the five-year average, compared with our forecast of 4% below the five-year average in last month’s STEO. The lower storage levels largely reflect higher expected power generation this summer compared with last month’s forecast.

• U.S. coal production in our forecast totals 598 million short tons in 2022, up 3% from 2021. In last month’s forecast, we expected coal production to rise 7% from 2021. The updated forecast reflects adjustments to our power generation model that resulted in lower coal demand than previously forecast.

• You can find more information in the detailed table of forecast changes.