U.S. refinery capacity sets new record as of January 1, 2020 (6/24/2020)

U.S. operable atmospheric crude oil distillation capacity increased 0.9% during 2019, reaching a record of 19.0 million barrels per calendar day (b/cd), up 0.2 million b/cd from the previous record of 18.8 million b/cd the year before. According to the U.S. Energy Information Administration’s (EIA) annual Refinery Capacity Report, U.S. operable crude oil distillation unit (CDU) capacity has increased slightly in seven of the past eight years (Figure 1). ... More »

Breakeven crude oil prices are one metric of the economic constraints facing OPEC+ members (6/17/2020)

On June 6, 2020, members of the Organization of the Petroleum Exporting Countries (OPEC) agreed, along with 10 other partner countries (OPEC+), to extend their pre-existing 9.7 million barrel per day (b/d) production cut through at least July 2020. For many OPEC+ countries, the nearly 50% decline in crude oil prices during the past six months is likely to exert significant pressure on their economies and financial reserves. The extent of this pressure can be assessed by analyzing breakeven oil prices. While breakeven prices for a company generally refer to the minimum oil price required for a well to be profitable, breakeven prices for a country measure the oil price that a government (in the case of a fiscal breakeven) or an economy (in the case of an external breakeven) needs to cover its expenses. ... More »

EIA raises its 2020 crude oil price forecast in the June STEO (6/10/2020)

Brent crude oil prices rose in May, reflecting a tightening in the global oil market balance. Initial data show that increased global oil demand and a high adherence to production cuts by the Organization of the Petroleum Exporting Countries (OPEC) and partner countries (OPEC+) drove the price increase. In the June 2020 Short-Term Energy Outlook (STEO), EIA forecasts that Brent crude oil prices will average $37 per barrel (b) in the second half of 2020, up from a forecast of $32/b in the May STEO (Figure 1). EIA forecasts that the price of Brent crude oil will average $48/b in 2021—unchanged from the May STEO forecast. Forecast rising crude oil prices reflect an expectation of declining global crude oil inventories in the second half of 2020 and in 2021. EIA expects that high inventory levels and ample spare crude oil production capacity will limit upward price pressures in the coming months, but as inventories decline into 2021, those upward price pressures will increase. ... More »

March saw major declines in U.S. demand for petroleum products (6/3/2020)

On March 13, 2020, the President declared a national emergency in the United States in response to concerns regarding the 2019 novel coronavirus disease (COVID-19) outbreak. Reduced economic activity and stay-at-home orders aimed at slowing the spread of COVID-19 led to a sharp decrease in demand for petroleum products. Because refiners responded faster to reduced demand than crude oil producers, crude oil inventories increased as refinery runs fell. Despite reflecting only one-half of a month under the declared national emergency, the U.S. Energy Information Administration’s (EIA) March Petroleum Supply Monthly (PSM) data show the early effects of the COVID-19 mitigation efforts. ... More »