Release date: January 8, 2020 | Next release date: January 15, 2020
Crude oil prices in 2019 were generally lower than in 2018
The international benchmark Brent crude oil futures price averaged $64 per barrel (b) in 2019, $7/b lower than its 2018 average. The U.S. benchmark West Texas Intermediate (WTI) futures price averaged $57/b in 2019, also $7/b lower than its 2018 average. Compared with recent years, both crude oil prices traded within relatively narrow price ranges in 2019. Brent prices reached a 2019 annual daily low of $55/b in early January and a daily high of $75/b in late April, resulting in a range of $20/b, the narrowest Brent price range since 2003. WTI prices ranged $19/b between $47/b and $66/b, the narrowest WTI price range since 2003. These narrow trading ranges occurred as a result of offsetting upward and downward price pressures, despite the largest single-day price increase since 2008, which followed the September attacks on Saudi Arabia’s crude oil production and processing infrastructure. More recently, crude oil prices have increased following the January 3, 2020, U.S. military operation in Iraq, likely reflecting an increase in geopolitical risk.
On September 14, 2019, an attack damaged the Saudi Aramco Abqaiq oil processing facility and the Khurais oil field in eastern Saudi Arabia. With a capacity of 7 million barrels per day (b/d), or about 7% of global crude oil production capacity, the Abqaiq oil processing facility is the world’s largest crude oil processing and stabilization plant. On Monday, September 16, 2019, the first full day of trading after the attack, Brent and WTI crude oil prices increased by $9/b and $8/b, respectively. However, the price increase did not affect the annual range because prices following the attacks did not rise higher than prices in April. The price increase was also relatively short-lived, and prices for both Brent and WTI fell below pre-attack levels by October 1.
Saudi crude oil production fell to 8.5 million b/d in September but returned to pre-attack levels in October, averaging 9.9 million b/d for the month. From January through November 2019, Saudi crude oil production averaged 9.8 million b/d, 590,000 b/d less than the average during the same period in 2018. The year-to-date production decline is largely the result of a production cut agreement between members of the Organization of the Petroleum Exporting Countries (OPEC) and ten additional non-member countries including Russia, Mexico, and Kazakhstan (OPEC+).
In its December Short-Term Energy Outlook (STEO), the U.S. Energy Information Administration (EIA) forecast that OPEC crude oil production would average 29.8 million b/d in 2019, down from 32.0 million b/d in 2018. In addition to production declines in Saudi Arabia, the decrease in total OPEC output was largely driven by falling production in Venezuela and Iran due, in part, to U.S. sanctions. Crude oil production in Venezuela averaged 820,000 b/d through November 2019, a decline of 620,000 b/d from the same period in 2018. Iranian crude oil production fell by 1.3 million b/d through November 2019 compared with the same period in 2018.
In 2019, several factors, including U.S. production and exports, global inventory levels, and demand-side concerns, provided downward pressure on crude oil prices, offsetting some of the upward pressure from the attacks on Saudi Arabia, OPEC+ production cuts, and U.S. sanctions on Venezuela and Iran.
In the December STEO, EIA expected U.S. crude oil production to average 12.3 million b/d in 2019, the highest level on record. EIA crude oil production data are available beginning in 1990. If the December STEO forecast is realized, the year-over-year growth of U.S. crude oil production in 2019 would be 1.3 million b/d, down slightly from the growth of 1.6 million b/d in 2018. Final monthly 2019 crude oil production data will be available at the end of February 2020 when the Petroleum Supply Monthly is released.
Based on monthly data for January through October, U.S. crude oil exports averaged 2.9 million b/d during that period in 2019, 920,000 b/d more than exported during the same period in 2018. Through October, crude oil was the largest U.S. petroleum export in 2019 followed by distillate (1.3 million b/d), propane (1.1 million b/d), and gasoline (0.9 million b/d) (Figure 2). September and October were the first two months on record that the United States exported more petroleum, including both crude oil and petroleum products, than it imported.
High U.S. crude oil production and exports helped supply the global petroleum market and contributed to higher-than-average inventory levels. Although EIA does not directly collect data on changes in global petroleum inventories, inventory data for countries within the Organization for Economic Cooperation and Development (OECD) provide some insight into the global balance. In the December STEO, EIA forecasts that OECD inventories in 2019 will average 2.9 billion barrels, 2% more than the previous five-year (2014–18) average.
During 2019, market concerns regarding global demand also provided downward pressure on crude oil prices. As a result of declining economic indicators and downward revisions to global gross domestic product (GDP) growth forecast (EIA bases its oil-weighted GDP forecast on work by Oxford Economics), EIA lowered its global liquid fuels consumption forecast (Figure 3). In the December STEO, EIA forecast that global petroleum consumption in 2019 would average 100.7 million b/d, which, if realized, would be the first time annual growth averaged less than 1.0 million b/d since 2011.
U.S. average regular gasoline and diesel prices increase
The U.S. average regular gasoline retail price rose nearly 1 cent from the previous week to $2.58 per gallon on January 6, 34 cents higher than the same time last year. The East Coast price rose nearly 4 cents to $2.54 per gallon. The Rocky Mountain price fell more than 2 cents to $2.64 per gallon, the Midwest price fell nearly 2 cents to $2.43 per gallon, the West Coast price fell more than 1 cent to $3.21 per gallon, and the Gulf Coast price fell nearly 1 cent, remaining virtually unchanged at $2.28 per gallon.
The U.S. average diesel fuel price rose 1 cent from the previous week to $3.08 per gallon on January 6, 7 cents higher than a year ago. The East Coast price rose more than 2 cents to $3.12 per gallon, and the Gulf Coast price increased 2 cents to $2.83 per gallon. The Rocky Mountain price declined more than 1 cent to $3.10 per gallon, the West Coast price fell nearly 1 cent to $3.62 per gallon, and the Midwest price fell less than 1 cent, remaining virtually unchanged at $2.98 per gallon.
Propane/propylene inventories rise
U.S. propane/propylene stocks increased by 0.7 million barrels last week to 88.9 million barrels as of January 3, 2020, 12.5 million barrels (16.3%) greater than the five-year (2015-19) average inventory levels for this same time of year. Gulf Coast and East Coast inventories increased by 1.2 million barrels and 0.4 million barrels, respectively. Midwest and Rocky Mountain/West Coast inventories decreased by 0.6 million barrels and 0.3 million barrels, respectively. Propylene non-fuel-use inventories represented 6.9% of total propane/propylene inventories.
Residential heating oil prices increase, propane prices decrease
As of January 6, 2020, residential heating oil prices averaged more than $3.12 per gallon, almost 5 cents per gallon above last week’s price and more than 3 cents per gallon higher than last year’s price at this time. Wholesale heating oil prices averaged almost $2.17 per gallon, nearly 1 cent per gallon higher than last week’s price and almost 28 cents per gallon higher than a year ago.
Residential propane prices averaged almost $2.01 per gallon, nearly 1 cent per gallon below last week’s price and almost 43 cents per gallon less than a year ago. Wholesale propane prices averaged $0.66 per gallon, more than 5 cents per gallon lower than last week’s price and nearly 11 cents per gallon below last year’s price.
For questions about This Week in Petroleum, contact the Petroleum Markets Team at 202-586-4522.
Retail prices (dollars per gallon)
| Retail prices | Change from last | ||
|---|---|---|---|
| 01/06/20 | Week | Year | |
| Gasoline | 2.578 | 0.007 | 0.341 |
| Diesel | 3.079 | 0.010 | 0.066 |
| Heating Oil | 3.124 | 0.047 | 0.032 |
| Propane | 2.005 | -0.006 | -0.427 |
Futures prices (dollars per gallon*)
| Futures prices | Change from last | ||
|---|---|---|---|
| 01/03/20 | Week | Year | |
| Crude oil | 63.05 | 1.33 | 15.09 |
| Gasoline | 1.749 | 0.002 | 0.401 |
| Heating oil | 2.061 | 0.011 | 0.292 |
| *Note: Crude oil price in dollars per barrel. | |||
Stocks (million barrels)
| Stocks | Change from last | ||
|---|---|---|---|
| 01/03/20 | Week | Year | |
| Crude oil | 431.1 | 1.2 | -8.7 |
| Gasoline | 251.6 | 9.1 | 3.5 |
| Distillate | 139.1 | 5.3 | -1.0 |
| Propane | 88.885 | 0.699 | 20.145 |