Gasoline and Diesel Prices Monitor
February 11, 2020
Crude Oil and Liquid Fuels
The Energy Information Administration (EIA) forecasts global petroleum and liquid fuels demand will average 100.3 million barrels per day in the first quarter of 2020. This demand level is 0.9 million barrels per day less than forecast in the January Short–Term Energy Outlook (STEO) and reflects both the effects of the coronavirus and warmer–than–normal January temperatures across much of the northern hemisphere.
The EIA's global petroleum and liquid fuels supply forecast assumes that the Organization of the Petroleum Exporting Countries (OPEC) will reduce crude oil production by 0.5 million barrels per day from March through May because of lower expected global oil demand in early 2020. This OPEC reduction is in addition to the cuts announced at the group's December 2019 meeting. In addition to these production cuts, EIA's lower forecast OPEC production reflects ongoing crude oil production outages in Libya during the first quarter.
Global liquid fuels inventories fell by roughly 0.1 million barrels per day in 2019, and EIA forecasts they will grow by 0.2 million barrels per day in 2020.
North Sea Brent crude oil spot prices averaged $64 per barrel in January 2020, down by $4 per barrel from December. Brent crude is expected to average $61 per barrel in 2020 and $68 per barrel in 2021.
The contango in the West Texas Intermediate (WTI) crude oil futures curve that developed in January is consistent with increases in U.S. crude oil and other liquids inventories, which—averaging 0.3 million barrels per day—increased at the fastest pace for the month of January since 2017. Also, trade press reports a significant decline in China's refinery intake, which is likely contributing to builds in crude oil inventories in Asia.
WTI crude oil spot prices are expected to average $56 per barrel in 2020 and $62 per barrel in 2021.