U.S. EIA Sees Global Oil Stock Strengthening Thanks to Rising OPEC, U.S. Supply
United States to adopt pre-pandemic exit by 2023
EIA says OPEC has a lot of spare capacity
U.S. gasoline prices will remain a challenge for Biden
The US Energy Information Administration raised its oil price outlook for 2022 on Jan. 11 by nearly $ 5 / bbl from last month, but sees those levels drop throughout the year as global supply exceeds demand in the second trimester.
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The EIA expects global oil demand to increase by 3.62 million b / d year-on-year in 2022, up 70,000 b / d from last month’s near-term energy outlook. That would bring demand back above 2019 levels for the first time since the pandemic, by around 260,000 bpd.
“We expect that as crude oil production increases, inventories will begin to build up and help drive down the prices of gasoline, jet fuel and other commodities in the near term,” the administrator said. EIA Acting Steve Nalley.
Growth in global oil demand would then slow to 1.75 million barrels per day in 2023, the EIA predicted.
The EIA raised its outlook for 2022 crude oil futures by $ 4.90 / bbl from last month to $ 71.32 / bbl for WTI and $ 74.95 / bbl for Brent. He sees oil prices drop in 2023 to an average of $ 63.50 / bbl for WTI and $ 67.50 / bbl for Brent.
US gasoline prices are likely to remain a pressure point for the Biden administration ahead of the US midterm elections in November, as the EIA expects them to exceed averaging $ 3.06 / gal for 2022. That’s 18 cents / gal higher than last month’s outlook.
But fuel prices will tend to fall throughout the year, falling below $ 3 / gal on a monthly basis by September, the EIA said. The latest outlook indicates that regular gasoline prices end the year at $ 2.77 / gal in December.
“Global supply chain disruptions have also likely exacerbated the effects of inflation on prices in all sectors in recent months,” the EIA said. “The way central banks react to inflation may affect economic growth and demand for oil over the forecast period.”
US supply should pick up
The EIA predicts that U.S. crude production will surpass pre-pandemic levels in 2023 to a record high of 12.41 million barrels / day. He sees US production increase from 640,000 bpd in 2022 to 11.8 million bpd. U.S. supply averaged 12.3 million barrels per day in 2019.
“The growth in production reflects oil prices which we believe will be sufficient to drive a continued increase in upstream development activity, which we believe will occur at a pace that will more than offset the rates of decline,” indicates the report.
Elsewhere in North America, EIA forecasts assume that no new upstream projects will go live in Canada in 2022 or 2023, leaving oil sands producers to target smaller incremental expansions or other existing projects. “Some growth will also come from removing bottlenecks in pipeline capacity,” the report said.
Mexico is seeing some of the biggest drops in EIA forecasts, after its crude oil and liquid fuel production averaged 1.9 million barrels per day, almost unchanged from 2019 and 2020 levels The EIA expects production to drop 100,000 bpd in 2023, reflecting financial constraints at state-owned Pemex and continuing large declines in mature fields that will not be offset by a new growth in fields exploited by foreigners.
The EIA predicts that OPEC’s excess capacity will be more than enough to meet higher-than-expected demand, even as the producer group continues to increase its monthly quotas. It estimates OPEC excess capacity at 3.9 million b / d in 2022 and 2023, down from 6 million b / d in 2021 but well above 2.2 million b / d in 2010-19, and that is before any further Iranian exports if the United States decides to relax these sanctions.
S&P Global Platts Analytics expects the global oil market to be in surplus in the first quarter, but estimates that OPEC + sustainable spare production capacity will decline to 800,000 bpd by June if it maintains its monthly quota increases, creating “an uncomfortably thin market buffer in the second half of the year.”
OPEC + production increased in December but again fell short of its quotas, according to the latest S&P Global Platts survey on January 11. Fourteen of the 18 members with quotas failed to meet these targets, including the largest Russian producer.