U.S. crude oil production forecast to decline until mid-2021 before returning to current levels (11/12/2020)

In the U.S. Energy Information Administration’s (EIA) November Short-Term Energy Outlook (STEO), U.S. crude oil production generally declines through the first half of 2021 and increases in the second half of the year. EIA expects that declining legacy well production will offset production from new wells in the first half of 2021, resulting in U.S. crude oil production declines. As more new wells come online later in 2021 (supported by forecast year-over-year crude oil price increases), forecast new well production reaches levels that exceed the legacy well declines, resulting in increasing crude oil production (Figure 1). ... More »

U.S. refinery runs remain lower than the five-year average in most regions (11/4/2020)

Gross inputs to U.S. refineries, also referred to as refinery runs, have been lower than the five-year (2015-19) average since April, when responses to the 2019 novel coronavirus disease (COVID-19) reduced demand for refined products such as gasoline, distillate fuel, and jet fuel. Since the end of August, the continued effects of the pandemic in the United States and in crucial destinations for U.S. petroleum exports in Europe and Latin America, in addition to seasonal factors, have resulted in continued lower refinery runs. The sustained lower runs throughout 2020 combined with relatively low crack spreads—an approximate indication of the profitability of refining based on the relative values of gasoline, distillate, and crude oil—have resulted in several announced refinery closures in the United States and abroad. ... More »

EIA forecasts OPEC net oil export revenues in 2020 to be the lowest in 17 years (10/28/2020)

The U.S. Energy Information Administration (EIA) expects that members of the Organization of the Petroleum Exporting Countries (OPEC) will earn about $323 billion in net oil export revenues in 2020, the lowest level in 18 years (Figure 1). EIA based this revenues estimate on forecast total petroleum liquids production—including crude oil, condensate, and natural gas plant liquids— forecast total petroleum consumption, and the crude oil price forecasts in the October 2020 Short-Term Energy Outlook (STEO). The expected decrease in export revenues compared with last year is driven by lower crude oil prices and lower export volumes. Crude oil prices have fallen as a result of lower global demand for petroleum products because of COVID-19 and associated mitigation efforts. Export volumes have also decreased as a result of high production disruptions in Libya, Iran, and, to a lesser extent, Venezuela and OPEC agreements to limit crude oil output in response to low crude oil prices. ... More »

Crude oil tanker rates likely to remain low until petroleum demand increases (10/21/2020)

In March and April 2020, the reduced demand for crude oil and petroleum products because of responses to COVID-19 led to a sharp increase in global crude oil inventories. As onshore inventories increased, market participants turned to using oil tankers to store oil, which is typically more expensive than onshore storage. The drop in global oil demand and increased need for floating storage occurred at a time when global crude oil production (specifically from members of the Organization of the Petroleum Exporting Countries, or OPEC) and demand for crude oil tankers was high, driving up tanker rates. Tanker rates have declined significantly since peaking in March because crude oil production and demand are now more balanced. However, oil inventories in floating storage remain relatively high. ... More »

EIA expects current, record-high U.S. distillate inventories to fall gradually through the winter heating season (10/15/2020)

U.S. distillate fuel oil inventories remained high through summer 2020 as a result of production outpacing demand, which continues to be affected by responses to the 2019 novel coronavirus disease (COVID-19). Although about two-thirds of distillate in the United States is consumed for on-highway use each year, demand typically increases during the fall harvest (October-November) in the agriculture sector and during the winter heating season (October–March) in the residential sector. The U.S. Energy Information Administration (EIA) expects that increased demand in these sectors will help to draw down high U.S. distillate inventories, but inventories are still likely to remain higher than the five-year (2015–19) average throughout most of the upcoming winter season. EIA forecasts that high inventories and lower crude oil prices will continue putting downward pressure on diesel prices through the 2020–21 winter season. ... More »

Global crack spreads remain low amid slow oil demand recovery and high stocks (10/7/2020)

In its latest Short-Term Energy Outlook (STEO), the U.S. Energy Information Administration (EIA) estimates that third-quarter 2020 global liquid fuels consumption averaged 94.2 million barrels per day (b/d), an increase from the second quarter but significantly lower than the same time last year. The slow recovery has contributed to low gasoline and diesel crack spreads and high petroleum product stocks in three major petroleum product trading and refining centers-the U.S. Gulf Coast, the Amsterdam-Rotterdam-Antwerp (ARA) region, and Singapore. Between April and September, the five-day moving average crack spread for each product in all regions, except for U.S. Gulf Coast gasoline, declined to their lowest levels since at least 2011 (Figure 1). September crack spreads remained significantly lower than their previous five-year (2015-19) averages. EIA has reduced its forecast for 2021 global consumption of petroleum and other liquids as a result of lowered expectations for economic growth in both 2020 and 2021, leading to a balanced global inventory outlook in 2021. ... More »

U.S. crude oil producers increased the amount and share of production covered by financial hedges in Q2 2020 (9/30/2020)

According to the U.S. Energy Information Administration’s (EIA) analysis of financial disclosures from 77 publicly traded U.S. crude oil producers, financial hedging activity in the second quarter (Q2) of 2020 increased year on year from the second quarter of 2019. As of their second quarter filings, these 77 companies entered into hedging contracts covering 673 million barrels of crude oil for the next four quarters, compared with the 583 million barrels of coverage provided during the same time last year (Figure 1). These companies collectively accounted for 3.9 million barrels per day (b/d), or 36% of total U.S. crude oil production, in Q2 2020. Crude oil producers enter into hedging contracts to lock in a specific price or range of possible prices that they will receive when selling their oil production in the future, thereby minimizing exposure to changing prices and increasing the stability and predictability of revenues. If these companies produce at the same levels they averaged during Q2 2020, these hedges would cover 47% of production during the following year, up from 41% during the equivalent period in Q2 2019. ... More »

In 2020, increased propane, other HGL exports contribute to continued strong product exports despite reductions in major transport fuels (9/23/2020)

In the first half of 2020, the United States exported 5.4 million barrels per day (b/d) of petroleum products, a slight increase of 48,000 b/d (1%) from the first half of 2019. The increase in exports occurred despite global demand declines because of responses to the outbreak of the 2019 novel coronavirus disease (COVID-19). Increased exports of petroleum products from the United States came primarily from propane and other hydrocarbon gas liquids (HGL), while exports of other refined products, including gasoline, distillate, and jet fuel, decreased in the first half of 2020 compared with the first half of 2019. ... More »

First half 2020 U.S. crude oil exports increase year over year despite declines beginning in March (9/16/2020)

U.S. net imports of crude oil (imports of crude oil minus exports of crude oil) declined in the first half of 2020 compared with the first half of 2019. However, monthly net imports increased in May and June 2020 as U.S. exports declined and imports increased. U.S. crude oil exports in the first half of 2020 were higher than in the first half of 2019 despite declining since the record high in February 2020 (Figure 1). Monthly crude oil imports declined sharply in April before increasing in May and June, but U.S. crude oil imports in the first half of 2020 were much lower than levels seen during the same period in 2019. The decline in trade volume (falling exports since March and declining in imports in April) came as responses to the spread of the 2019 novel coronavirus disease (COVID 19) reduced petroleum demand. ... More »

OPEC+ production cuts between January and August 2020 contributed to global oil market rebalancing (9/10/2020)

As global demand for petroleum liquids declined significantly in March and April 2020, global oil inventories increased at record levels, rising by an average of 5.9 million barrels per day (b/d) in the first quarter and 7.2 million b/d in the second quarter of 2020. As a result of the lower demand and ample global oil inventories, global crude oil prices fell in March and April to record lows. In response to these market conditions, on April 15, members of the Organization of the Petroleum Exporting Countries (OPEC) and partner countries (OPEC+) agreed to reduce crude oil production. The OPEC+ agreement called for a decrease in crude oil output by a combined 9.7 million b/d in May and June, a combined decrease of 9.6 million b/d in July 2020, and a combined decrease of 7.7 million b/d in August (not accounting for compensation cuts for under-complying countries). Compared with January levels, OPEC+ production fell by an estimated 5.9 million b/d in May, 7.9 million b/d in June, 7.1 million b/d in July, and 5.6 million b/d in August. U.S. Energy Information Administration (EIA) data show that OPEC production in May decreased by 6.0 million b/d from April, which was the largest monthly production decline on record. Between January and July 2020, OPEC crude oil production decreased by 5.7 million b/d. The non-OPEC partner countries reduced their production by 2.8 million b/d in July from production levels in January 2020. EIA data for non-OPEC producers include crude oil and condensate production. ... More »

Lowest U.S. average regular gasoline retail price heading into Labor Day weekend since 2004 (9/2/2020)

The U.S. average regular gasoline retail price as of the Monday before Labor Day weekend is $2.22 per gallon (gal) this year, the lowest level for this time of year since 2004 (Figure 1). The Labor Day holiday is typically the end of the summer driving season, the time when gasoline demand is usually greatest during the year. Because of responses to the 2019 novel coronavirus disease (COVID-19) and efforts to mitigate its spread, however, monthly U.S. gasoline consumption (as measured by product supplied) has remained less than the previous five-year (2015-19) range since March. The low price going into Labor Day 2020 reflects continued weak gasoline demand following a summer that saw reduced commuter and recreational travel activity. ... More »

Flight data confirm changes in overall U.S. jet fuel consumption estimates (8/26/2020)

Global consumption of transportation fuels has trended lower during the past several months as a result of the spread of the 2019 novel coronavirus (COVID-19) and efforts to contain and mitigate it. Although total U.S. jet fuel consumption has been particularly affected by these measures, averaging 29% lower during the first five months of 2020 than during the same time last year, analysis of flight-level data provided by Cirium on commercial passenger flights suggests that demand for jet fuel in the United States is likely recovering faster than in most other major aviation markets. Increased demand for aviation services and the compartively low share of travel that crosses international borders in the United States are driving this relatively fast recovery. ... More »

U.S. refineries respond to record-low demand by decreasing inputs to certain downstream units (8/19/2020)

Starting in mid-March 2020, transportation fuel demand in the United States decreased to record lows as a result of reduced economic activity and stay-at-home orders aimed at slowing the spread of the 2019 novel coronavirus disease (COVID-19). In response to low demand and decreased profitability, as measured by crack spreads, U.S. refiners decreased inputs of crude oil to atmospheric distillation units (ADUs) and decreased processing of fresh feed by downstream units in order to decrease output of certain products. Demand for gasoline and jet fuel fell faster than demand for diesel, and refiners decreased runs in units associated with gasoline production (such as catalytic crackers) more than they decreased runs in units focused on distillate production (such as catalytic hydrocrackers). ... More »

Aggregate and well-level data show magnitude and drivers of North Dakota's declining crude oil production (8/12/2020)

The sharp decline in petroleum demand caused by the 2019 novel coronavirus disease (COVID-19) and efforts to contain it has led to a similarly significant decline in the supply of petroleum in the second quarter 2020 and, by extension, crude oil production, both internationally and domestically. According to data from the U.S. Energy Information Administration (EIA), total U.S. crude oil production declined by 21.9% between December 2019 and May 2020, with the Federal Offshore Gulf of Mexico falling by 18.2%, Alaska by 16.0%, and the Lower 48 states (excluding North Dakota) by 19.4% (Figure 1). Although significant production declines were reported throughout much of the United States, North Dakota's reduction is particularly notable given its speed and severity; the state's production experienced a 41.6% decline between December 2019 and May 2020. ... More »

As lockdowns ease, May gasoline demand increases and crude oil production slows (8/5/2020)

The U.S. Energy Information Administration’s (EIA) data show that demand (tracked by EIA as product supplied) for gasoline increased month-over-month in May as many states began to relax stay-at-home orders, while demand for jet fuel continued to decline to historic lows because of reduced commercial air travel. The May data also show a decline in crude oil inventories—because of a narrow uptick in crude oil runs (or crude oil inputs to refineries)—and a large decline in crude oil production. EIA’s July Petroleum Supply Monthly (PSM), which includes the complete set of key U.S. petroleum data from May 2020, shows how crude oil and petroleum product markets continue to be affected by the changing measures taken to mitigate the spread of the 2019 novel coronavirus disease (COVID-19). ... More »

COVID-19's impact on global commercial jet fuel demand has been significant and uneven (7/29/2020)

Efforts to contain the 2019 novel coronavirus disease (COVID-19) have dramatically reshaped markets for key petroleum fuels, and consumption patterns for jet fuel have seen some of the largest changes. According to the International Energy Agency, global jet fuel demand averaged 8.0 million barrels per day (b/d) in 2019, which is less than both gasoil/diesel demand (28.9 million b/d) and gasoline demand (26.4 million b/d). But, air travel-and by extension jet fuel demand-has proved particularly vulnerable to the disruptions caused by COVID-19 mitigation efforts. As of July 29, 2020, of the 37 member states of the Organization for Economic Cooperation and Development (OECD), 32 are partially or completely closed to international air travel as a result of COVID-19 mitigation efforts. Only four remain free of restrictions, and one is in the process of reopening soon, according to data from travel company Booking Holdings Inc. In addition, air travel's high passenger density requirements, large share of nonbusiness travelers, and the long distances involved have further dampened demand. ... More »

Product crack spreads increase from recent lows but face uncertain demand, high inventories (7/22/2020)

U.S. gasoline and diesel crack spreads (the difference between the price of crude oil and the wholesale price of the petroleum product, which are used as estimates of refinery margins) diverged sharply in March as the 2019 novel coronavirus disease (COVID-19) spread. As COVID-19 mitigation efforts and travel restrictions were put in place, gasoline demand (as measured by product supplied) fell, pulling gasoline crack spreads down. During the same period, demand for diesel fuel remained relatively strong, which contributed to a sharp increase in diesel crack spreads. In April, diesel yields increased as demand fell, reducing the diesel crack spread, while gasoline demand began to increase. Since then, gasoline and diesel crack spreads in the U.S. Gulf Coast (home to about half of the U.S. refining capacity) have stabilized and moved together (Figure 1). However, high gasoline and distillate inventory levels are putting downward pressure on product prices and the crack spread, and the demand outlook remains uncertain. ... More »

U.S. oil producers wrote down asset values, announced spending cuts in first quarter of 2020 (7/15/2020)

According to their publicly filed financial statements, 40 U.S. oil producers collectively wrote down $48 billion worth of assets in the first quarter of 2020. Low oil prices contributed to significant declines in revenue and the value of proved reserves for these companies. Writing down the value of an asset—also called an impairment—is a non-cash adjustment when a company formally acknowledges the value of an oil property has declined below the cost of developing it and the company updates the estimated fair value. First-quarter 2020 financial results also reveal steps many companies took to stabilize cash flows, including increased use of credit and announcements of significant cuts to capital expenditure budgets. ... More »

EIA forecasts global stock draws through 2021 (7/8/2020)

The disruptions to global petroleum supply and consumption as a result of the 2019 novel coronavirus disease (COVID-19) and associated mitigation efforts have been significant. As road and air travel fell sharply when economies around the world went into lockdown in the first quarter and early second quarter of 2020, global liquid fuels consumption fell more quickly than production. Based on the mismatch between production and consumption of liquid fuels, the U.S. Energy Information Administration (EIA) estimates that global oil inventories increased by almost 1.3 billion barrels from the start of 2020 through the end of May. Inventory growth caused Brent crude oil spot prices to fall from a monthly average of $64 per barrel (b) in January to $18/b in April. In late April, when price declines were the steepest, market participants had concerns about the ability of global storage capacity to hold the quickly rising inventory. The situation in global oil markets has now shifted, however, and EIA's July Short-Term Energy Outlook (STEO) forecasts global stock draws in every quarter moving forward through 2021. ... More »

April data indicate record increase in U.S. crude oil inventories, record decreases in refinery runs and demand (7/1/2020)

On March 13, 2020, President Trump declared a national emergency in the United States in response to concerns regarding the 2019 novel coronavirus disease (COVID-19) outbreak. The U.S. Energy Information Administration's (EIA) June Petroleum Supply Monthly (PSM), which includes the first complete set of key U.S. crude oil data from April 2020 (the first complete month after the declaration of the national emergency), shows the significant behavioral effects of the several measures taken to mitigate the spread of COVID-19 and of the virus itself. The April data include record month-over-month changes in several key areas, including refinery runs, product supplied for motor gasoline and jet fuel, and ending stocks for crude oil. ... More »