U.S. EIA forecasts record consumption of petroleum products

The U.S. Energy Information Administration (EIA) released its latest Short-Term Energy Outlook (STEO) on June 6. The Outlook forecast record levels of liquid fuels consumption in 2023 and 2024, such as gasoline and jet fuel. 

“We expect to see demand for travel continue to increase,” says EIA Administrator, Joe DeCarolis. Consumption of petroleum products is anticipated to rise by 1.6 million barrels per day (bpd) in 2023 from last year’s average of 99.4 million bpd. Non-OECD countries are the main drivers of growth, especially China. Although, the petroleum market remains highly uncertain, says DeCarolis.

Global oil production is expected to grow in 2023 and 2024. However, the EIA has lowered its growth forecast since the last STEO following Saudi Arabia’s June 4 announcement of deep cuts to its output from July 2023. Saudi’s energy ministry has outlined a reduction of 1 million bpd, the largest decline in years. OPEC+, a group of 23 oil-exporting countries, has also extended its existing production cuts of 3.66 million bpd to the end of 2024. Global production increases will be led by non-OPEC countries. The EIA expects the Brent crude oil price to average USD79 per barrel in the second half of 2023 and USD84 per barrel in 2024. Global oil inventories are expected to fall slightly over the next five quarters.

In the U.S., annual record highs in crude oil production are anticipated in 2023 and 2024, although growth rates are slowing. U.S. dry natural gas production will remain just below the record 104 billion cubic feet per day achieved in April 2023 for the rest of the year.

A reduction to forecast GDP growth in the U.S. has resulted in a lower forecast distillate (mostly diesel) fuel consumption. The EIA now anticipates U.S. distillate consumption will fall in 2024 after previously outlining a growth trajectory.

Solar was the leading source of new electricity generating capacity in the U.S. this year and the EIA expects a 24% increase in electricity produced by solar power this summer. Coupled with natural gas prices that are significantly lower than last year’s peak, The Outlook signposts a drop in coal-fired electricity generation.