July 9, 2019 - The July edition of the Short-Term Energy Outlook (STEO) includes expanded analysis text, which is provided semi-annually.

Brent crude oil spot prices averaged $64 per barrel (b) in June, $7/b lower than in May 2019 and $10/b lower than the price in June of last year. The Energy Information Administration (EIA) forecasts Brent spot prices will average $67/b in the second half of 2019 and remain at that level in 2020. EIA expects West Texas Intermediate (WTI) crude oil prices will average $62/b in the second half of 2019 and $63/b in 2020. EIA’s forecast WTI price of $63/b for December 2019 should be considered in the context of NYMEX WTI futures and options contract values for December 2019 delivery that traded during the five-day period ending July 3, 2019. These contracts suggest a range of $40/b to $84/b encompasses the market expectation for December NYMEX WTI prices at the 95% confidence level.
   

EIA forecasts global oil inventories will increase by 0.1 million barrels per day (b/d) in both 2019 and 2020. Rising global oil inventories largely reflect an increasingly weak outlook for global oil demand in 2019. EIA forecasts global oil demand will rise by 1.1 million b/d in 2019, 0.2 million b/d less than forecast in the June STEO. In 2020, EIA expects demand growth to average 1.4 million b/d.
   

EIA estimates that U.S. crude oil production averaged 11.0 million b/d in 2018, up 1.6 million b/d from 2017, achieving a record high for total production and year-over-year growth. EIA forecasts U.S. crude oil production will average 12.4 million b/d in 2019 and 13.3 million b/d in 2020, with most of the growth coming from the Permian region of Texas and New Mexico.
   

U.S. regular gasoline retail prices averaged $2.72 gallon (gal) in June, down 14 cents/gal from May. EIA expects monthly average gasoline prices peaked for the year in May at an average of $2.86/gal. EIA expects regular gasoline retail prices to average $2.65/gal in 2019 and $2.76/gal in 2020.

EIA forecasts that U.S. crude oil and petroleum product net imports will average 0.6 million b/d in 2019, down from an average of 2.3 million b/d in 2018. EIA forecasts the United States will be a net exporter of crude oil and petroleum products at a rate of 0.1 million b/d by the fourth quarter of 2019 and by an average of 0.5 million b/d in 2020.

EIA forecasts that U.S. dry natural gas production will average 91.3 billion cubic feet per day (Bcf/d) in 2019, up 8.0 Bcf/d from the previous record in 2018. EIA expects annual average U.S. natural gas production will rise by 1.4 Bcf/d in 2020.

EIA forecasts that Henry Hub natural gas spot prices will average $2.50 per million British thermal units (MMBtu) in the second half of 2019 and $2.77/MMBtu in 2020. EIA’s forecast for the second half of 2019 is 29 cents/MMBtu lower than forecast in the June STEO. The lower forecast reflects recent price declines and EIA’s updated assessment of U.S. drilling activity and average well productivity. EIA’s forecast for the average Henry Hub price for December 2019 of $2.80/MMBtu should be considered in the context of NYMEX Henry Hub futures and options contract values for December 2019 delivery that traded during the five-day period ending July 3, 2019. These contracts suggest a range of $1.64/MMBtu to $4.03/MMBtu encompasses the market expectation for December Henry Hub natural gas prices at the 95% confidence level.

EIA forecasts that U.S. coal production will total 684 million short tons (MMst) in 2019, down by 72 MMst (9%) from 2018. U.S. coal production will further decline by 45 MMst (7%) in 2020. This expected decrease is the result of declining coal consumption in the electric power sector and a lower forecast demand for U.S. coal exports.

EIA expects the share of U.S. total utility-scale electricity generation from natural gas-fired power plants will rise from 35% in 2018 to 38% in 2019 and then decline slightly in 2020. EIA forecasts that the share of U.S. generation from coal will average 24% in 2019 and 23% in 2020, down from 27% in 2018. The forecast nuclear share of U.S. generation falls from 20% in 2019 to 19% in 2020, reflecting the retirement of reactors at five nuclear plants in 2019 and 2020. Hydropower averages a 7% share of total U.S. generation in the forecast for 2019 and 2020, similar to 2018. Wind, solar, and other nonhydropower renewables together provided 10% of U.S. total utility-scale generation in 2018. EIA expects they will provide 11% in 2019 and 13% in 2020.

After rising by 2.7% in 2018, EIA forecasts that U.S. energy-related carbon dioxide (CO2) emissions will decline by 2.2% in 2019 and by 0.7% in 2020. EIA expects U.S. CO2 emissions will fall in 2019 and in 2020 because its forecast (based on data from the National Oceanic and Atmospheric Administration) assumes that temperatures will return to near normal. U.S. emissions are also expected to decline because the forecast share of electricity generated from natural gas and renewables increases while the forecast share generated from coal, which is a more carbon-intensive energy source, decreases.

Upcoming Changes to Short-Term Energy Outlook Electricity Forecasts

Beginning with the August 6, 2019 publication of the Short-Term Energy Outlook (STEO), EIA will expand its forecasts for electricity supply in the United States and introduce new forecasts for wholesale electricity prices. The STEO will include forecasts of electric power sector generation and fuel consumption for 12 electricity supply regions. These STEO forecast regions largely correspond to the electricity market and system operations areas where electricity is dispatched in the United States. In addition, EIA will publish new forecasts of average peak-period wholesale electricity prices for each of the STEO electricity supply regions. As a result of this new information, there will be some changes to the standard STEO electricity tables published each month. These changes will not affect the electricity forecasts or tables for the July 2019 STEO.