Notable Forecast Changes
- EIA forecasts Brent crude oil prices to average $65 per barrel (b) in 2019, up $2/b from last month’s STEO forecast. Global oil market balances for all of 2019 are slightly tighter than in the March STEO, with forecast inventory builds averaging 0.1 million barrels per day (b/d), slightly less than previously forecast. Given the slightly tighter balances and recent crude oil spot prices increases, EIA now forecasts Brent prices to average $69/b in the second quarter of 2019, which is $5/b higher than in the March STEO. However, EIA expects global inventories to build by 0.4 million b/d next year, contributing to a Brent price forecast of $62/b for 2020, which is unchanged from last month’s STEO.
- EIA forecast U.S. lower 48 onshore crude oil production will average 10.5 million b/d in 2020, which is more than 0.2 million b/d above the 2020 forecast in the March STEO. The higher crude oil production is the result of both higher forecast prices in 2019 that have a lagged effect on production and of data updates that increased drilling levels in the Permian Basin. Additionally, EIA forecasts Gulf of Mexico offshore crude oil production will average 2.1 million b/d in 2020, which is almost 0.2 million b/d below the 2020 forecast in the March STEO. The lower forecast is the result of model adjustments that updated decline rate forecasts. The net effect of these changes is that forecast total U.S. crude oil production is 0.1 million b/d more than in the March STEO.
- EIA expects natural gas consumption to increase by 2.5 billion cubic feet per day (Bcf/d) (3.0%) in 2019, up from expected growth of 1.5 Bcf/d (1.8%) in the March STEO. The forecast largely reflects higher consumption in the first quarter of 2019, as a result of estimated heating degree days for March that were higher than previously forecast. The colder-than-expected temperatures in March raised consumption of natural gas for space heating use in the residential and commercial sectors. In addition, EIA slightly raised its forecast growth of natural gas consumption in the industrial and electric power sectors for 2019.
