The EIA released its Short Term Energy Outlook on Tuesday… Here are some highlights:
EIA estimates that demand for global petroleum and liquid fuels averaged 93.4 million b/d in July. Demand was down 9.1 million b/d from July 2019, but it was up from an average of 85.0 million b/d during the second quarter of 2020, which was down 15.8 million b/d from year-ago levels. EIA forecasts that consumption of petroleum and liquid fuels globally will average 93.1 million b/d for all of 2020, down 8.1 million b/d from 2019, before increasing by 7.0 million b/d in 2021. Reduced economic activity related to the COVID-19 pandemic has caused changes in energy supply and demand patterns in 2020.
EIA estimates that global liquid fuels production averaged 91.8 million b/d in the second quarter of 2020, down 8.6 million b/d year over year. The decline reflects voluntary production cuts by the Organization of the Petroleum Exporting Countries (OPEC) and partner countries (OPEC+), and reductions in drilling activity and production curtailments in the United States because of low oil prices. In the forecast, the global supply of oil continues to decline to 90.4 million b/d in the third quarter of 2020 before rising to an annual average of 99.4 million b/d in 2021.
EIA estimates that U.S. liquid fuels consumption averaged 16.2 million b/d in the second quarter of 2020, down 4.1 million b/d (20%) from the same period in 2019. The decline reflects travel restrictions and reduced economic activity related to COVID-19 mitigation efforts. EIA expects U.S. oil consumption will generally rise through the end of 2021. EIA forecasts U.S. liquid fuels consumption will average 18.9 million b/d in the third quarter of 2020 (down 1.8 million b/d year over year) before rising to an average of 20.0 million b/d in 2021. Although the 2021 forecast level is 1.6 million b/d more than EIA’s forecast 2020 consumption, it is 0.4 million b/d less than the 2019 average.
EIA has lowered U.S. crude oil production estimates for 2020 by 370,000 b/d from the previous STEO. EIA expects crude production to average 11.3 million b/d in 2020 and 11.1 million b/d in 2021, down from 12.2 million b/d in 2019. Recently released EIA data show that average monthly U.S. oil production for May was 1.2 million b/d lower than the July STEO forecast, indicating more extensive production curtailments than previously estimated. Also, EIA’s August STEO assumes that the Dakota Access Pipeline will remain operational. A U.S. District Court ordered on July 6 the temporary closure of the Dakota Access Pipeline beginning in early August. A U.S. appeals court has overturned the lower court decision, allowing the pipeline to remain running while further litigation proceedings continue.