EIA’s short-term oil market outlook · –Gross Domestic Product is expected to average 2.0%...

www.eia.govU.S. Energy Information Administration Independent Statistics & Analysis

EIA’s short-term oil market outlook

3rd Annual Kay Bailey Hutchinson Center Symposium

September 27, 2018 | Austin, Texas

By

Dr. Linda Capuano, EIA Administrator

2

Mission: EIA collects, analyzes, and

disseminates independent and

impartial energy information to

promote sound policymaking, efficient

markets, and public understanding of

energy and its interaction with the

economy and the environment.

EIA is the Nation’s source of energy

information and, by law, its data,

analyses, and forecasts are

independent of approval by any other

officer or employee of the United

States Government.

Dr. Linda Capuano, KBH Center - Austin, TX

September 27, 2018

Success: solid legal foundation and trust

3Dr. Linda Capuano, KBH Center - Austin, TX

September 27, 2018

Legal right to collect • Federal Energy Administration Act of 1974 (Public Law 93‐275)

• Department of Energy (DOE) Organization Act of 1977 (Public Law 95-91)

• Other legal mandates

Legal obligation to protect• Confidential Information Protection and Statistical Efficiency Act (CIPSEA),

Title V of the E-Government Act of 2002 (Pubic Law 107-347)

• Freedom of Information Act, 5 USC. 552, exemptions 3, 4, and 6

• Paperwork Reduction Act, 44 U.S.C. 3501

• Information Quality Act, P.L. No. 106-554; H.R. 5658, Section 515(a)

Structure of U.S. Statistical System

4

• Three Branches of Government: Executive; Legislative; and

Judiciary.

• Executive Branch – 15 Departments

• 190 Agencies within 15 Departments

• 90 out of 190 Agencies perform statistical collections of some

sort

• 13 out of 90 are Principal Federal Statistical Agencies


September 27, 2018

EIA’s data collection and analytical products integrate all energy

sectors


September 27, 2018

EIA mission and stakeholdersMission: EIA collects, analyzes, and disseminates independent and impartial energy

information to promote sound policymaking, efficient markets, and public understanding of

energy and its interaction with the economy and the environment.


September 27, 2018

Examples of Activities

Business/Industry

• Manufacturers – market research

Energy Sector

• Consumers – monitor price forecasts

• Producers – track inventory statistics

Finance/Consulting

• Commodities Analysts – market response to supply data

Private Citizens

• Public – research gasoline prices

Government

• Executive Agencies – WH, DOE, & EPA use EIA data to track

energy markets and program performance and to analyze

policy proposals

• Congress – policy development and agency funding

• State Governments – planning and program development

Media/Education

• Journalists – cite energy statistics

• Teachers – use Energy Kids materials

• Researchers – energy forecasting and modeling

EIA Data Products and Tools


September 27, 2018 7

• Coal Data Browser

• Crude Import Tool

• Weekly Natural Gas Storage Report

• Hourly Electric Load Tool

• Southern California Daily Energy Report

• Residential Energy Consumption

EIA Analytical Products



• Annual Energy Outlook

• International Energy Outlook

• Short-Term Energy Outlook

• This Week in Petroleum

• Weekly Natural Gas Storage Report

• Today in Energy

September Short Term Energy Outlook - Key takeaways



• Crude oil prices are expected to remain near current levels as oil markets

are expected to be in relative balance in the coming months

– Pipeline constraints in the Permian basin are expected to contribute to lower

Permian well head and Cushing prices

– Lower global oil inventory levels and OPEC spare capacity could contribute to oil

price volatility and rising prices in the case of supply disruption

• Growth in global oil demand is expected to be relatively strong in 2018 and

2019, but there is mounting concern over the pace of economic growth that

could trigger downward pressure on oil prices

• Crude oil and natural gas plant liquid production in the United States is

expected to continue to grow strongly, even with pipeline constraints

EIA forecasts crude oil prices to generally remain near current

levels through the end of 2019



Crude oil spot prices (monthly average)

dollars per barrel (nominal)

Sources: Thomson Reuters; EIA, September 2018 Short-Term Energy Outlook

0

10

20

30

40

50

60

70

80

90

100

110

120

130

140

150

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Brent

WTI

forecast

A forecast for mostly balanced crude oil markets contributes to

the expectation of a narrow range for prices



Global oil market balances

million barrels per day

Sources: EIA, September 2018 Short-Term Energy Outlook

forecast

86

88

90

92

94

96

98

100

102

104

106

Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4

2013 2014 2015 2016 2017 2018 2019

world production

world consumption

//

0

-2

-1

0

1

2implied stock build

implied stock draw

Most forecasted global oil supply growth is expected to come

from North America



Annual change in liquid fuels production



0.4

0.6

2.0

2.0

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

2016 2017 2018 2019

forecast

world net change

non-OPEC

Eurasia

North America

Latin America

other non-OPEC

OPEC countries

NGPLs and crude oil drive U.S. production growth, with much

of this growth from the Permian



Annual change in U.S. liquid fuels production



-0.4

0.8

1.9

1.3

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

2016 2017 2018 2019

ethanol

and biodiesel

natural gas

plant liquids

crude oil

net change

forecast

Low OPEC spare capacity combined with lower inventory

levels could contribute to price volatility



OPEC spare crude oil production capacity (annual average)



0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

forecast

2008-17 average

Non-OECD nations are projected to account for 64% of the 739 quadrillion Btu global

energy consumption by 2040

15

266

473

0

100

200

300

400

500

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

Non-OECD

OECD

IEO2018 Reference case world energy consumption

quadrillion Btu

Source: EIA, International Energy Outlook 2018


September 27, 2018

ProjectionHistory

In the forecast, China, India, and the United States provide

about two-thirds of global liquid fuels consumption growth



Annual change in liquid fuels consumption



1.551.53

1.581.47

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2016 2017 2018 2019

forecast

world

other non-OECD

Middle East

India

China

other OECD

United States

Many non-OECD countries are projected to lead global

economic growth



1.7%

0.4%

1.5%

1.6%

2.0%

2.1%

2.3%

2.4%

0% 2% 4% 6%

Total OECD

Japan

OECD Europe

Canada

South Korea

United States

Mexico/Chile

Australia/New Zealand

4.1%

1.4%

1.6%

2.4%

2.5%

3.1%

3.8%

4.2%

4.5%

6.0%

0% 2% 4% 6%

Total Non-OECD

Russia

Brazil

Other Americas

Other…

Middle East

Africa

Other Asia

China

India

IEO2018 Reference case

average annual percent change in real GDP by region, 2015–40


OECD Non-OECD

China’s GDP and energy consumption growth have slowed in

recent years



Chinese GDP and energy consumption

annual growth rate, five-year moving average


0%

5%

10%

15%

1983 1991 1999 2007 2015

China GDP

China total primary

energy consumption

Per capita income and energy consumption continue to lag other

major economies




energy consumption per capita

million Btu per person


China

India

Russia

South KoreaUnited States

0

50

100

150

200

250

300

350

400

0 20,000 40,000 60,000 80,000GDP per capita

2010 U.S. dollars per person

Africa

2000---------2015---------2040 IEO2018 Reference case projection

2018 International Energy Outlook - Key takeaways



• Energy consumption in the non-OECD countries began to exceed OECD

consumption in 2007 and is projected to reach nearly two-thirds of the 739

quadrillion Btu global energy consumption in 2040

• The world’s energy consumption through 2040 increases, on average, for all fuels in

the IEO2018 Reference case

• The IEO2018 side cases show higher economic growth drives increasing energy

consumption, while services or manufacturing pathways to growth modulate that

consumption

• Per capita energy consumption in India and Africa remain comparatively low despite

high economic growth in the IEO2018 side cases

• IEO2018 side cases highlight the need to further explore the relationship between

high economic growth, relative sizes of the services and manufacturing sectors, and

energy consumption

World energy consumption increases for fuels other than coal



229

182

161

38

129

0

50

100

150

200

250

1990 2000 2010 2020 2030 2040

ProjectionHistory

petroleum and other

coal

natural gas

renewables

nuclear


world energy consumption by energy source

quadrillion Btu


AEO2018 Highlights



• U.S. net energy exports occur over the projection period to 2050 in most cases

– U.S. becomes a net energy exporter by 2022 in Reference Case

– Strong domestic production and relatively flat demand

• Increased energy efficiency offsets growth in energy demand

– Energy consumption grows about 0.4%/year on average in the Reference case

– Gross Domestic Product is expected to average 2.0% annual growth to 2050 in the

Reference case

• U.S. liquids and natural gas production continues to grow through 2042 and 2050,

respectively

– Result of further tight and shale resources development, despite relatively low prices

• Most new electricity generation capacity will be natural gas/renewables after 2022

(Reference case)

– Result of low natural gas prices, declining renewables technology costs and

supportive policies

The United States becomes a net energy exporter in most cases



-40

-30

-20

-10

0

10

20

30

40

1990 2000 2010 2020 2030 2040 2050

2017

history projections

net imports

net exports

Low Oil and Gas

Resource/Technology

Low Oil Price

Reference case

High Oil Price

High Oil and Gas

Resource/Technology

Net energy trade

quadrillion British thermal units

Source: EIA, Annual Energy Outlook 2018

The United States becomes a net petroleum exporter in most cases



Petroleum net imports as a percentage of product supplied

percent


-60

-40

-20

0

20

40

60

80

2000 2010 2020 2030 2040 2050

2017

history projections

Low Oil Price

Low Oil and Gas

Resource/Technology

Reference

High Oil Price

High Oil and Gas

Resource/Technology

net imports

net exports

EIA Annual Energy Outlook 2018: U.S. energy consumption and production

sees significant changes through 2050 under current laws and policies



0

5

10

15

20

25

30

35

40

45

1990 2000 2010 2020 2030 2040 2050

2017

history projections

petroleum & other liquids

natural gas

coal

other renewable energy

hydroliquid biofuels

nuclear

0

5

10

15

20

25

30

35

40

45

1990 2000 2010 2020 2030 2040 2050

natural gas

crude oil and

lease condensate

coal


natural gas plant liquids

hydro

2017

history projections

nuclear


Energy Consumption (Reference case)

quadrillion British thermal unitsEnergy Production (Reference case)


The fuel sector mix of energy consumption changes over the

projected period in the Reference case



0

5

10

15

20

25

30

35

40

45

1990 2000 2010 2020 2030 2040 2050

2017

history projections

Energy Consumption by source (Reference case)


petroleum and other liquids

natural gas

coal

nuclear

hydro


liquid biofuels0

5

10

15

20

25

30

35

40

45

1990 2000 2010 2020 2030 2040 2050

electric power

industrial

transportation

residential

commercial

Consumption by sector (Reference case)


2017

history projections


Transportation demonstrates the impact of energy efficiency on

consumption



0

5

10

15

20

25

30

2010 2020 2030 2040 2050

2017

history projections

light-duty vehicles

medium and

heavy duty

commercial

light trucks

rail

air

marine

other0

5

10

15

20

25

30

2010 2020 2030 2040 2050

2017

history projections

motor

gasoline

distillate

fuel oil

jet fuel

electricity

other

Transportation sector energy consumption by fuel type


Energy consumption by travel mode – Reference case



Light-duty vehicle fuel economy improves with increasing sales of more fuel-efficient

cars, while electrified powertrains gain market share in the Reference case



0

2

4

6

8

10

12

14

16

18

20

2010 2020 2030 2040 2050

2017

history projections

battery electric

plug-in hybrid

hybrid electric

flex fuel

gasoline

diesel

other

Light-duty vehicle sales by fuel type

sales (millions)


Residential and commercial energy consumption grows slowly

through 2050



0

1

2

3

4

5

6

1980 1990 2000 2010 2020 2030 2040 2050

2017

history projections

0

1

2

3

4

5

6

1980 1990 2000 2010 2020 2030 2040 2050

2017

history projections

Commercial sector delivered energy consumption



electricity

natural gas

petroleum and other

liquids

other

Residential sector delivered energy consumption


Increased efficiency contributes to slowing the growth of electricity

use in buildings sector



0 1 2 3 4

other uses

cooling

water heating

lighting

fridges & freezers

heating

TVs and PCs

clothes & dishwashing

cooking

2017

2050

0 1 2 3 4 5 6

other uses

comp. & office equip.

refrigeration

ventilation

cooling

lighting

heating

cooking

water heating

2017

2050

Use of purchased electricity per square foot of

commercial floorspace

thousand kilowatthours per thousand square feet


Use of purchased electricity per household

thousand kilowatthours per household

Change in electricity generation fuel mix is reflected in shifting

capacity additions and retirements



-30

-20

-10

0

10

20

30

40

50

2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

2017

history projections

solar

wind

oil and

gas

nuclear

other

coal

additions

retirements

Annual electricity generating capacity additions and retirements (Reference case)

gigawatts


U.S. energy consumption and production sees significant changes

through 2050 under current laws and policies



0

5

10

15

20

25

30

35

40

45

1990 2000 2010 2020 2030 2040 2050

2017

history projections

petroleum & other liquids

natural gas

coal


nuclear

hydroliquid biofuels

0

5

10

15

20

25

30

35

40

45

1990 2000 2010 2020 2030 2040 2050

natural gas

crude oil and

lease condensate

coal


natural gas plant liquids

hydro

2017

history projections

nuclear

Energy Consumption (Reference case)


Energy Production (Reference case)



For more information



U.S. Energy Information Administration home page | www.eia.gov

Short-Term Energy Outlook | www.eia.gov/steo

Annual Energy Outlook | www.eia.gov/aeo

International Energy Outlook | www.eia.gov/ieo

Monthly Energy Review | www.eia.gov/mer

Today in Energy | www.eia.gov/todayinenergy

http://www.eia.gov/

http://www.eia.gov/steo

http://www.eia.gov/aeo

http://www.eia.gov/ieo

http://www.eia.gov/mer

http://www.eia.gov/todayinenergy

EIA’s short-term oil market outlook · –Gross Domestic Product is expected to average 2.0%...

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