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April 8, 2020

EIA’s Short-Term Energy Outlook is the source for EIA’s latest analysis of energy markets

Short-Term Energy Outlook
Source: U.S. Energy Information Administration, Short-Term Energy Outlook

The Short-Term Energy Outlook (STEO) provides the U.S. Energy Information Administration’s (EIA) near-term perspective on energy markets. Each month, the STEO provides forecasts through the end of the next calendar year for consumption, supply, trade, and prices across major fuel types. In addition, the STEO provides in-depth market analysis for crude oil, petroleum products, and natural gas markets. Although its emphasis is on U.S. energy markets, the STEO also includes forecasts for certain international liquid fuels markets.

The historical data underpinning the STEO forecast each month come from a wide range of EIA publications, such as the Petroleum Supply Monthly, the Electric Power Monthly, the Natural Gas Monthly, and the Weekly Natural Gas Storage Report. Each STEO forecast also relies on external data sources for information, such as weather data from the National Oceanic and Atmospheric Administration (NOAA), spot and futures market prices, and global and U.S. macroeconomic indicators.

Economic models provide the foundation for the STEO forecast. In the STEO, EIA also incorporates analyst judgment to account for recent market developments and events such as regulatory changes, weather disruptions, supply and demand disruptions, and pipeline or fuel distribution constraints.

To provide context for the forecast, each edition of the STEO includes forecast highlights and a near-term markets review section for crude oil, petroleum products, and natural gas markets. In January and July of each year, the STEO contains a comprehensive analysis of the forecast for the entire energy industry, including global and U.S. liquid fuels markets, U.S. energy-related emissions, and domestic natural gas, coal, electricity, and macroeconomic markets.

Every April and October, EIA publishes a Summer Fuels Outlook and Winter Fuels Outlook, respectively, as supplements to the monthly STEO. The Summer Fuels Outlook focuses on prices and consumption of gasoline, diesel, and electricity—fuels whose consumption is highest during the summer months. The Winter Fuels Outlook focuses on residential winter heating fuels expenditures.

The most current STEO, which provides forecasts through the end of 2021, was published on April 7. In light of heightened uncertainty in energy markets caused by the 2019 novel coronavirus disease (COVID-19) and the suspension of production cuts among the Organization of the Petroleum Exporting Countries (OPEC) and partner countries, EIA provided a fuller analysis of the key assumptions driving this month’s forecast, in addition to the markets review. An abridged version of the Summer Fuels Outlook was also included in the April 2020 STEO.

In the April STEO, EIA forecasts that the price of the international crude oil benchmark Brent will average $33 per barrel (b) in 2020, only slightly higher than its $32/b average price in March. This price forecast is driven by the economic contraction caused by COVID-19 and a sudden increase in crude oil supply following the suspension of agreed production cuts among OPEC and partner countries.

EIA expects Brent crude oil prices to rise to an average of $46/b in 2021, as a return to declining global oil inventories puts upward pressure on prices. In addition, EIA forecasts significant decreases in U.S. liquid fuels demand during the first half of 2020 as a result of COVID-19 travel restrictions and significant disruptions to business and economic activity.

Principal contributor: Terry Yen